Western sanctions haven’t curbed Russian oil profits, but the green energy transition could.

Introduction:

The goal was to lessen pricing pressure on consumers worldwide by limiting the amount of money Russia makes from its oil while guaranteeing that it continues to flow into the global market. Around that time, the price of a barrel of oil was around USD 80 (66 pounds).

The contrary has occurred more than ten months later: Russian exports have decreased but its profits have soared, giving it more money to pursue the conflict. This is due to the fact that oil prices have exceeded USD 80 per barrel since July 2023 and occasionally reached USD 95 per barrel, levels last seen in November 2022. Despite being subject to a price ceiling, Russian Oil has been even more in demand because of a shortage on the world’s oil markets. Sanctions and price controls don’t appear to pose a threat to Russia’s leadership on the world oil market.

However, long-term effects for Russia’s oil industry could result from domestic issues and market shifts that were already in the works before the conflict in Ukraine. increasing oil prices once more: Why is there a price cap?

According to a US Treasury study released in May 2023, the price restriction succeeded in its objectives. Despite the fact that the country exported roughly 5–10% more crude oil in April 2023 compared to March 2022, it reported a fall in Russian oil income. In line with what Western nations had planned when they launched the Russian oil market, Russian oil was likewise trading at a large discount to world oil prices.the price cap.

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