On Wednesday, 4th May 2022, news broke that the European Union (EU) was initiating plans to implement a ban on Russia, a consequence of the nation’s ongoing war against the state of Ukraine. However, even before the EU proposed the ban, which would severely limit the country’s ability to store unsold oil, the president, Kremlin had already put out warnings last month that their oil output could fall by as much as 17% this year, a statement corroborated by recent studies conducted by experts.
Rystad Energy, one of the groups taking part in the study, estimated that Russian oil production could crash by as much as 20% by 2030, reducing the output to a mere 7.5 million barrels per day. Matt Smith, a lead oil analyst at Kpler, had much dire predictions, stating that a decline could happen within a year or two after an embargo.
Slashing production would not help matters either, as the extreme climates of oil-making regions like Siberia could damage wells if allowed to go dormant for extended periods, hindering Russia’s ability to pump oil over the long term.
An embargo “definitely undermines Russian status as it limits the flow of funding to Russia, making it more difficult to wield its power abroad,” said Aleksander Tomic, economist and Boston College Associate Dean. “Even if the embargo doesn’t pass, block members could still impose bans on a country by country basis, which would still put significant pressure on Moscow.”
But even more worrisome, according to Tomic, was Russia’s global standing, particularly with the way world powers view nations that haven’t cut ties with the country.
“At this point, Russia would most likely have to go through a regime change to re-establish trust and for business to return to normal. This is likely a very tall order. Already countries are hesitant to be seen engaging in business with Moscow. The number of Russian oil cargoes labeled ‘destination unknown’ has skyrocketed since the war in Ukraine began. Wary buyers are looking to avoid affiliation with the nation.”
Also speaking on the embargo, Ari Redbord, head of legal and government affairs at TRM and a former US Treasury staffer said: “The willingness of European nations to potentially crater their economies to squeeze Russia is telling in itself. This is a move that was once almost unimaginable. These sanctions will have a significant impact on the European economy, which shows just how serious the world is, on punishing Russia for its aggression on Ukraine.”
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Michael is a writer, primarily of genre fiction like fantasy, but also has interested in the contemporary arts. When not reading he can be found looking up videos about history, mythology and everything tech.