On December 5, oil sanctions against Russia came into force. They consist of two cases. The first is a ban on the export to the countries of the European Union of Russian oil delivered by tankers by sea (it can only be transported through pipelines - to Hungary and Bulgaria). The second case is the introduction of a limit price for Russian oil at $60 per barrel (recall, President of Ukraine Volodymyr Zelensky said that such a price limit is not enough). Well-known Russian opposition politician, energy specialist Vladimir Milov commented on Yevgeny Kiselyov’s YouTube channel what real consequences these restrictions will have on the Russian budget, and therefore on the financial ability of the Putin regime to continue the war.
“From the reorientation of oil trade to the Asian market, Russia will lose 30-40% of its income”
“The most important of the two sanctions cases is the embargo, that is, a ban on the purchase of Russian oil by European companies, and after 2 months - oil products- said Vladimir Milov. - This is very important, because Europe was the main market for Russian oil. Switching to the Asian market will be very difficult and will inevitably lead to a significant loss of revenue, in particular because partners in the Asian and Pacific regions offer significantly lower prices and require discounts from Russian suppliers. In addition, the transportation of Russian oil to those regions of the planet is significantly more expensive and much longer in time than to European ones. Let’s say, to deliver to Rotterdam or Genoa is a few days. And in India - a whole month. For these reasons, before Russia’s open attack on Ukraine, India, which is a major oil importer, did not buy it from Russia at all.“.
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Vladimir Milov recalled that immediately after Russia’s full-scale invasion of Ukraine, many buyers in Europe voluntarily abandoned Russian oil. Managers of Russian companies were obliged to redirect her to Asia. But Asian partners demanded - provide discounts. Then in the spring they agreed on a discount of $35 per barrel on average, now it’s somewhere around $23-24.
Before the current embargo, Russia was selling an average of 8 million barrels per day, Milov said. Of these, about 6 million barrels were sent to Europe (about two-thirds of crude oil, the rest - oil products). This brought her, according to rough estimates, half a billion dollars a day. Now the Russians will have to build 6 million barrels that went to the EU at a big discount in Asia. As a result, the income of the Putin regime will be reduced by about 30-40% - financial losses from the reorientation to Asian markets will amount to 200-300 million dollars a day.
“It is not yet clear how to force companies not to buy oil from Russia for more than $60 per barrel - a reliable control mechanism has not been created”
According to Milov, it will be very difficult to control the compliance of companies with the price limit for Russian oil at the level of no more than $60.
“In the United States, the Sanctions Monitoring Agency has about 250 employees, - the expert explained his opinion. - This team monitors sanctions against all problematic countries - North Korea, Cuba, Iran, Russia and so on. In the case of Russian oil, we are talking about thousands of very complex transactions. I have had conversations with many European politicians and officials regarding the cap price. None of them could convincingly explain how they are going to control it so that companies do not exceed it. Moreover, it follows from the official comments of the US Treasury Department that it relies primarily on the psychological impact on entrepreneurs. Like, the companies themselves will negotiate with the Russian side from the position that they have no right to buy more than $60. But the market does not work like that: if the price is higher, they will buy more expensive. That is, the control mechanism is still crude. Therefore, the main thing is the European oil embargo. I hope the Europeans will fulfill it as they promised.”
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“Oil will have to be transported to Asia by sea”
The specialist explained what transport capabilities the aggressor country has to redirect 6 million barrels of oil per day to Asia.
“There is an oil pipeline East Siberia - the Pacific Ocean, ending in Nakhodka, but its capabilities have long been fully used. Vladimir Milov says - Therefore, the Russians will have to transport oil to Asia by sea: from the terminal to Novorossiysk and from the terminal in Primorsk (Baltic) - there is no other option now. There are reports that Russian companies intend to increase the transportation of oil to the east by rail - to ports, and then reload on tankers. But then again, with this delivery option, transport costs are very high.“.
The West should influence India, Vietnam, Algeria, Egypt, Iraq to convince them not to buy Russian weapons.
Vladimir Milov spoke about Russia’s export of other goods that can bring significant profits.
After the start of the Great War, Russia greatly reduced gas exports to non-CIS countries, except for Turkey and Hungary, the specialist emphasized. Moreover, the gas valve was blocked by the Russian dictator himself - wanting to freeze Europe.
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As for Russian coal, the embargo on it in the EU was introduced back in August. Sanctions have also been imposed on other Russian exports, including steel. But the export of Russian aluminum this year has increased significantly, because the sanctions on it have not yet been introduced. So the billionaire owner of aluminum production enterprises Oleg Deripaska continues to grow rich, but deductions from aluminum exports to the state budget are not large. For Deripaska works according to a special commercial scheme (the so-called tolling scheme), according to which the taxable base is limited.
In October, the issue of banning the export of diamonds from Russia was considered as the eighth package of sanctions in the EU. Its amount is about 3 billion dollars a year. Unfortunately, Belgium blocked this initiative.
“In my opinion, the West could make an effort to prevent Russia from selling arms,” Vladimir Milov said. - Putin recently boasted that in the first half of the year the Russian Federation exported weapons worth 6 billion dollars. It is important that this money goes directly to enterprises of the military-industrial complex. The event should work in this regard with countries such as India, Vietnam, Algeria, Egypt, Iraq, which buy Russian weapons. The US and the EU can influence these countries. There have already been individual cases of refusals of contracts - the Philippines and India terminated contracts for the supply of Russian helicopters. But this is not enough - the flow of money continues to go to military plants in Russia. Six billion dollars for the first half of the year, perhaps the same amount will be for the second. Total 12 billion dollars. To make it clear how much this is, it should be said that the maintenance of the Russian army (purchase of ammunition, food, payment of salaries) takes 6 billion dollars a year. That is, from the export of weapons, Russia has 2 budgets for the maintenance of its army“.
Recall that Pavel Klimkin believes that the war will end for us when the Russian regime is completely reset.
Photo from https://ostwest.tv
Source: Fakty
