Dr Nakhle says that the impact of the ban depends on the timing that the sanctions become effective as well as the level of the oil prices at the time of the implementation of those sanctions. Russia will surely feel the economic pain of losing important access to a key market, which is the European Union (EU). However, its economy will not be crippled overnight, especially when the world is not taking a unified stance. China and India, the largest oil importers in the world, are still buying Russian oil.
Germany is Russia’s largest energy customer. Outside the EU, Asia is playing an increasingly greater role. In addition to the Power of Siberia pipeline, Russia and China announced building another pipeline to become operational by 2030. Meanwhile, refineries in India are taking advantage of Russian crude grade, Urals, trading at a discount to Brent.
The EU recognises the economic cost of banning Russian oil and this is why they have considered a gradual ban. This is supported by countries like Germany which only a month ago described banning Russian oil as a red line.
Watch the discussion:
“Sanctions and the Economic Consequences of Higher Oil Prices“, Christof Rühl, Apr 2022
“Energy Markets and the Design of Sanctions on Russia“, Christof Rühl, Mar 2022
“EU Energy Talks“, Dr Carole Nakhle, May 2022
“EU Talks to Ban Russian Oil“, Dr Carole Nakhle, May 2022
“Where are we in the oil markets?“, Dr Carole Nakhle, May 2022
“The West and Russian Hydrocarbons: Towards an end to this dependency?“, Dr Carole Nakhle, May 2022
“Is Moscow turning to Asia?“, Dr Carole Nakhle, Apr 2022