The unprecedented sanctions imposed by the United States and the European Union against Russia had no impact on Russian oil exports or revenues. Who is the beneficiary?
Reuters reports Russia exports almost all of its oil to China and India
Russian Deputy Prime Minister Alexander Novak said on Wednesday that almost all of Russia's oil exports this year were shipped to China and India, after Moscow responded to Western economic sanctions by quickly diverting supplies away from Europe.
Russia has successfully circumvented sanctions on its oil and diverted flows from Europe to China and India, which together account for about 90% of its crude oil exports, Novak, who is in charge of the country's energy sector, told state television Rossiya-24.
He said that Russia had already begun to establish relations with Asia-Pacific countries before the West imposed sanctions on Moscow after the conflict began in Ukraine in February 2022.
“As for those restrictions and bans on supplies to Europe and the United States that were imposed, this only accelerated the process of redirecting our energy flows,” Novak said.
He said that Europe's share of Russian crude oil exports fell to only about 4-5% from about 40-45%.
“The main partners in the current situation are China, whose share has risen to almost 45-50%, and of course India… Earlier, there were basically no supplies to India; “Within two years, the total share of supplies to India has reached 40%,” Novak said.
The demand for oil has not changed
The numbers are believable. Certainly, the demand for oil has not decreased. All the sanctions did was force a shift in global supply chains.
There was a cost for Russia to transform its supply chains, but there was also a cost for Europe and the United States as well.
Rising costs meant higher oil prices for everyone.
The absurdity of the buyer's cartel
The number of economists promoting a buyers' union to suppress the price of Russian oil (and only Russian oil) is astonishing.
I laughed at the idea when it came out on June 28, 2022 A funny explanation for the G7 monopoly of oil price buyers has emerged
The agreement, which was reached in the early hours of the third day of the G7 summit in Schloss Elmau in the Bavarian Alps, comes in the wake of… Growing frustration among Western countries that their ban on Russian oil has had the opposite effect of raising global crude oil prices.. This has led to a situation where Moscow ends up making more money for its war chest, and where oil market reactions help drive runaway inflation.
Ultimately, the leaders' statement specifically identified this as the preferred option. He added: “We will consider a range of approaches, including options for a possible comprehensive ban on all services, that enable the transportation of Russian crude oil and petroleum products by sea globally.” Unless oil is purchased at a price or lower agreed upon in consultation with international partnersThe statement said.
The root of stupidity
The G7 does not want Russia to sell any oil, but if it succeeds, the price should rise unless production rises elsewhere or demand falls.
Instead of acknowledging the economic fundamentals, the G7 leaders, especially Biden and Macron, continue to focus on even stupider ideas.
Despite the apparent stupidity of this scheme, some prominent economists supported the idea.
Central bank purchases
Treasury Secretary and former Federal Reserve Chair Janet Yellen signed on to the cartel idea.
Former European Central Bank President Mario Draghi also pushed this idea.
The insurance plan backfires
The next not-so-great Western sanctions plan was to deny insurance to ships carrying Russian oil.
Russia responded by purchasing Greek ships and then transporting the oil without insurance on its ships rather than paying others. It unloaded oil in the middle of the night to large Chinese oil tankers.
Not having to pay insurance costs along with using its own ships helped Russia's profits even if the price Russia received was slightly lower.
Sanctions do not work because they create new markets
On September 19, 2023, she was suspended Today's lesson: Sanctions do not work because they create new markets
Foreign Policy: Since the Russian invasion of Ukraine, the robust Greek shipping sector has continued to make good money shipping Russian oil. But Greek shipowners have discovered an apparently more profitable source of income: selling the ships themselves to mysterious buyers linked to Russia. One publication announced that a “Major Greek Tanker Sale” is now underway, and no price seems too high for a used tanker. But former Greek ships enter the Hades-like shadow economy.
Lesson number two
States, political leaders, and market makers act in their own interests.
It is in the interest of Greek shipping companies to sell ships in this way. It is in the interest of India and China to buy Russian oil and Greek ships until they do so.
It is in the interest of Dubai brokers to create a market for ships so they do this.
What it boils down to is simple: It is in the interest of the mediators in Greece, Russia, India, China and Dubai to ask Biden to go to hell, and they do so.
New White House Fact Sheet
Despite the track record of failure, on December 22, 2023 a White House Fact Sheet He explains The Biden administration expands US sanctions powers to target financial facilitators of the Russian war machine
President Biden today signed a new Executive Order (EO) strengthening U.S. sanctions powers against financial facilitators of the Russian war machine. The Bureau of Labor makes clear to foreign financial institutions that they risk losing access to the U.S. financial system if they facilitate large transactions related to Russia's military industrial base. The executive office also provides the authority to expand the US import ban on certain Russian goods.
What did Biden do?
He banned diamond imports and seafood imports.
Yes, this way it will make Russia crawl on its knees. Does anyone buy Russian seafood now other than China?
The Indian envoy meets Putin, bypassing Western pressure
The New York Times reported on December 27 The Indian envoy meets Putin, bypassing Western pressure
Russian President Vladimir Putin on Wednesday met with India's foreign minister in the Kremlin, where he highlighted Russia's attempts to break its isolation from the West by becoming an increasingly powerful Asian nation.
Despite the Biden administration's efforts to make support for Russia costly, US officials have avoided overt criticism of India. Instead, President Biden and others courted Modi, even welcoming him to a state dinner over the summer. This courtship continued even after US law enforcement officials accused Indian officials in November of plotting to assassinate an American Sikh activist in the United States..
New Delhi relies heavily on Russia for the bulk of its arms imports, and Moscow has helped India build nuclear and space capabilities from scratch.
“The areas of defence, nuclear and space are usually cooperation that you only do with countries that have a high degree of trust,” Jaishankar told members of the Indian community in Moscow on Tuesday.
During Mr. Jaishankar's visit on Tuesday, India and Russia agreed to build future power generation units for the Kudankulam Nuclear Power Plant in southern India, which is being built with Russia's help. Construction of the plant began in March 2002. It is expected to become fully operational in 2027
What does Russia need?
This question came in response to my letter There was no acceptance of offers to pay for oil in Indian rupees
Russia does not need gold. Russia needs spare parts! All kinds of parts, computers, microchips, cars, etc., anything that is not manufactured.
Additional geopolitical lesson
Russia especially needs computers and microchips. China and India need oil. Neither of them cares, nor should they, about US sanctions.
Russia now gets parts of China and India in exchange for oil. Russia was obtaining spare parts from the European Union and the United States. This is the extent of the failure of sanctions.
Here's a retrospective clip from April 13, 2022: Janet Yellen warns China about Russia and the creation of a bipolar global financial system
Hi Janet Yellen, Who exactly is it that pushed China, and now India, into Russia's arms?
Both Trump and Biden believe that they are able to set policy for the whole world. How did that work out?
The US sanctions policy has not only failed, but it has backfired. China was the biggest beneficiary.
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