Russian oil exports Photo: depositphotos
Despite the ongoing geopolitical tensions in the Middle East, Brent crude oil prices continue to remain low, hovering below $75 per barrel, even falling below $70 in September. This is a quarter of the level seen when the price cap on Russian supplies was developed, Bloomberg oil strategist Julian Lee wrote in his November 21 column.
Falling oil prices combined with a possible oversupply create an ideal opportunity for measures that would tighten sanctions against Russia, putting the Kremlin under economic pressure. Although the existing mechanism of limiting oil prices, introduced at the request of the US, has not had the expected impact on Moscow’s revenues, its effectiveness may change in the current market conditions.
Until now, Russia’s oil industry, in particular, has avoided serious losses thanks to the support of countries such as China, India and Turkey, which actively import Russian crude. However, according to Li, if these countries could be persuaded to stop or reduce their imports of Russian oil, especially through the “shadow fleet,” this would lead to an inevitable decline in exports and a serious blow to the Russian economy.
Currently, 90 oil tankers transporting Russian oil are under sanctions, but the effectiveness of the restrictions remained questionable, as the vessels were idle for only a few months after being blacklisted by the US, UK and EU. Recently, however, Moscow has begun to restore these tankers without facing serious repercussions from the host countries.
“Maybe it’s time to do it seriously,” Julian Lee said, pointing to the growing need for tougher sanctions that could really hit the Russian budget and force Moscow to reconsider its plans for the oil market.
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