Moscow earns at least a billion dollars a day from selling oil and gas, and a large portion of Russia’s revenue comes from Europe.
Despite predictions of the imminent end of Russia’s heavy economic sanctions, in the two months that have passed since the start of the special operation in Ukraine, Russia has increased oil supplies to the EU and countries such as India and Turkey, and its financial sector. so far has been able to avoid a liquidity crisis. Michael Hirsch wrote this in an article for Foreign Policy.
It is indicated that the prohibitive measures may work for a long time, but now there is a situation where those countries that have imposed sanctions against Moscow itself are undermining their effectiveness by buying energy from Russia. Federation, and in some cases even in April more than in March.
“Putin still earns at least a billion dollars a day selling oil and gas, and a large portion of Russia’s revenue comes from Europe,” said Edward Fishman, a former European specialist at the U.S. State. Department. negligible compared to the payments they make to Russia for oil and gas. “
Oil exports rose to 3.6 million barrels a day in April from 3.3 million barrels a day a month earlier, according to Matt Smith of Kpler, a company that tracks oil cargo ships across of Western restrictions on Russia’s financial sector. .
“The main takeaway is that Russia’s crude oil exports in April were actually higher than in March,” Smith said. “That’s amazing.”
As experts from the Institute of International Finance write in a report released this week, Russia’s oil deliveries in April are still continuing “at record speeds.” Although there is a large discount on Russia’s oil compared to world benchmarks, this means that “oil export revenues are likely to be higher in the same month in previous years.”
As a result, Russia’s current account surplus hit a new high. It reached $ 60 billion in the first three months of the year, up from $ 120 billion across 2021, giving the Kremlin new revenue to counter sanctions, even if the ban on sanctions means Russia has fewer ability to purchase materials and parts from abroad. . Russia is the third largest producer of crude oil in the world after the US and Saudi Arabia.
It is not yet possible to say exactly what the quantity of deliveries will be and who they will receive. Some of this oil is on the road, in some cases to unknown destinations or storage facilities, experts say. According to Christopher Haynes, an analyst at London-based consulting firm Energy Aspects, most of this volume is long-term oil contracts, while Europe is suppressing this import.
Other energy experts point out that Moscow is increasing exports from existing stocks as it awaits further Western sanctions on oil (and Western countries are buying it for the same reason, which prompts of the sharp reduction of Moscow prices). According to Haynes, during this period, the volume of processing within the country was actually reduced. According to the International Energy Agency, at the beginning of April, oil production in Russia fell by $ 700,000 barrels a day. This suggests that Russia could shift limited production to export rather than domestic processing.
U.S. and European officials insist that in the long run, Putin will not be able to escape the catastrophic economic consequences of his actions.
“As a result of the economic crisis facing Russia, the Kremlin will have fewer resources to support Russia’s economy, resume operations in Ukraine and power the project in the future,” said U.S. Deputy Treasury Secretary Wally Adeyemo.
Over time, this can happen. The head of the Russian Central Bank, Elvira Nabiullina, said on April 18 that the lack of technology and other components would soon affect the situation and that Russia was “entering a difficult period of structural changes associated with penalties. ” Experts expect a serious reduction in credit available to individuals and legal entities of Russia this year, with the economy shrinking by 8-15%. In the longer term, in the current environment, some economists predict that Russia’s economy may shrink by one-fifth or more over the next few years.
So far, however, Russia’s earnings data tells a different story – about how widespread and uncertain the international response is, and how attractive Russia’s discounted oil is during a period of rising prices. of energy and runaway inflation almost everywhere in the world. Nothing is more true than energy markets. According to the latest data, Russia’s oil exports jumped in the first few weeks of April, with India, Turkey and Italy receiving more, while exports to the rest of the EU remained virtually none. changes. While the United States, Great Britain, Australia and Canada have completely banned imports from Russia, most European countries, led by Germany, continue to buy it.
The largest percentage increase came from India, which refused to join sanctions against Russia or condemned Moscow for its actions in Ukraine. Taking advantage of deep discounts, India bought $ 17 million of high-quality Urals oil from Russia in just the past two months, compared to $ 12 million across last year, according to Kpler expert Smith. In the past, New Delhi bought oil mostly from producers in the Middle East and Nigeria, but now it gets huge discounts from Russia.
Turkey increased Russia’s oil imports by 200,000 barrels a day in March to 300,000 in April. Italy has also started consuming more Russian oil, increasing consumption from 100,000 barrels a day to 300,000. Some of this oil is shipped to refineries in Europe, which are partially owned and controlled by Russia.
The Kremlin has also been able to set up a strong new-and unsanctioned-banking center at Gazprombank, Gazprom’s finance arm. And thanks to Nabiullina’s deft manipulations, which raised rates and introduced currency controls that prevent Russians from taking money out of the country, the ruble is at almost the same level as in February. The government has also introduced a requirement that 80% of hard currency exports must be sold through authorized banks, especially Gazprombank. Inflation in Russia is growing rapidly, prices are rising more than double digits, but, according to various estimates, by the end of the year it can not exceed 25%.
For Vladimir Putin, the biggest question in the future is whether he can adapt his economy to a prolonged lockup. Other economies face the same stranglehold as Iran did, and Moscow could keep its banks running for long periods of time with energy subsidies if they become technically insolvent.
Russia, unlike Iran, has not experienced nearly total destruction of its energy exports. But the withdrawal of Western imports of consumer goods, manufacturing materials and parts, as well as the increasing burden on Russian finances, will ultimately cause serious damage to the economy. And if unemployment rises sharply, it could show the Russian government a problem it hasn’t yet faced – the safety of the system.
The other day, it was reported that the Russian state company Rosneft was unable to sell 6.5 million tons of oil in a large -scale tender, as it required a full prepayment in rubles.
Big traders reduce buying Russian oil – Reuters
News from Athletistic in the Telegram. Subscribe to our channel Athletistic
Source: korrespondent
