Crappy Economics | Stupid War Sanctions

The Oil Sanctions on Russia Don’t Work

How a new grey economy has been born

Joshua Edward
3 min readFeb 7, 2023

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Photo by Fredrick Filix on Unsplash

In December the West took aim at Russian oil revenues by unleashing the biggest package of energy sanctions ever imposed on a single country. Europe, which had been a big buyer of Russian seaborne crude, banned imports, while it also barred its long-dominant shippers, lenders and insurers from facilitating the sale of Russian crude to other buyers.

The only exception was oil old below $60 a barrel.

Two months in, a second round of European sanctions is due to come into force on February 5th. Unfortunately, it will only make Russia stronger.

The December ban-and-cap policy has not succeeded in curbing sales of Russian crude. After a lull while European firms worked out how to comply with the new price cap, shipments have resumed at pace — directed not to Europe, but to China and India instead. Russia’s exports of unrefined oil averaged 3.7 million barrels a day in the four weeks to January 29th — the highest level since June, and more than in any four-week period in 2021.

An advocate of the price cap would say that this is proof of the scheme’s success. The point, after all, was to ensure that Russian oil continued to flow…

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Joshua Edward

Left the USA for Europe as a solo parent and raised a kid in a foreign land.