Sanctions and the Economic Consequences of Higher Oil Prices

Christof Rühl

In this commentary, published by the Center on Global Energy Policy of Columbia University, Christof Rühl, member of the Advisory Board of Crystol Energy and a Senior Fellow at the Center on Global Energy Policy, discusses the energy sanctions on Russia and the economic consequences of higher oil prices. 

Daily Crude Oil Spot Prices, $ per barrel
Data Source: EIA, 2022

The trouble with energy sanctions is that they will backfire badly if they lead to price increases large enough to damage the economic performance of sanctioning countries.

This is particularly true for oil. Oil price changes are transmitted all around the globe. Directly or indirectly, they will affect literally almost every person on this planet.

Some of the key highlights of the commentary include:

  1. The current energy sanctions, voluntary for all participants, are more flexible than what we have seen in the past
  2. Today’s oil price, adjusted as it should be for inflation and efficiency, is still lower than what we have seen ten years ago
  3. There are huge safety valves in the system (the Strategic Petroleum Reserve is but one of them)
  4. All things considered, there is headroom to tighten further the global consumption of oil and gas from the Russian Federation

Related Analysis

Energy Markets and the Design of Sanctions on Russia“, Christof Rühl, Mar 2022

No endgame for Ukraine“, Christof Rühl, Feb 2022

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Can Europe decrease its reliance on Russian gas?“, Dr Carole Nakhle, Mar 2022

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