2024-03-28 07:42:29
Due to the tightening of Western sanctions, Russia is struggling to collect the oil revenues which finance its war against Ukraine. Is the noose finally tightening around the cash machine of the Russian economy?
Several signals indicate this: Vladimir Putin’s spokesperson, Dmitri Peskov, acknowledged that payments were delayed because of so-called secondary sanctions. He mentions the threats of retaliation made at the end of December by the American Treasury against banks which do not scrupulously respect the sanctions.
A message received five out of five in China, the United Arab Emirates or Turkey. In these friendly countries of Russia, several banks have suspended a number of Russian accounts. Those who still agree to work with Russian intermediaries are being extra careful and are therefore taking longer, weeks or even months, to disburse payments for transactions with Moscow.
Indian imports of Russian crude in decline
Second turn of the screw in India: refiners have banned the largest Russian crude transport company. Sovcomflot was banned by Reliance, the largest private refiner, then by all of its public or private competitors. The company transported about 15% of Russian crude destined for India. India, which has become the second importer of Ural origin, after China, since the implementation of sanctions, is in the process of diversifying its supply. Its Russian imports have fallen in volume since December and have been offset by purchases of Iraqi crude. In the coming weeks, India is also expecting a large shipment of American crude.
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The noose is tightening, Russia’s oil revenues are falling, but not enough to call into question the Kremlin’s war financing. The legal-commercial guerrilla war against Russian oil having so far produced rather mixed results, Ukraine took military action in January. It seriously damaged Russian refineries with its drone strikes but immediately paid the price. The Russian army’s retaliatory fire destroyed around 20% of its electrical capabilities.
The price of oil determining in this war
The energy war only produces losers, on the battlefield and in the economy. Beyond the damage and human losses endured by Ukraine and by Russia, the West fears above all that the destruction of Russia’s strategic oil infrastructure will cause prices to soar. This would be a new punishment for the Western economy, especially for Europe already weakened by the rise in gas prices.
To bring Russia to its knees, we should above all encourage the fall in prices, recommends Andriy Yermak, advisor to Volodymyr Zelensky. In a column published on March 27 by the Wall Street Journal, he recalls that the descent into hell of the oil market in 1986 – when a barrel was worth only ten dollars – precipitated the collapse of the Soviet Union. Today, a barrel is at $85, a comfortable level for the Kremlin war machine.
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