The West’s sanctions against Russia are an ongoing cat-and-mouse game of enforcement and evasion. Over time, they are working to subvert Russia’s economy.
In the months after Russian President Vladimir Putin unleashed his ruinous full-scale invasion last year, high crude oil prices provided a safety net for Russia’s overall economy. This year, following an array of Western sanctions, its oil and gas revenue is estimated to have been cut roughly by half, costing Russia in the range of $150 billion.
Along with capital flight, the loss of revenue has caused a steady decline in the ruble, which has lost more than a third of its value against the dollar over the past year. The central bank has responded with sharp interest rate increases, intended to stabilize the currency. Ordinary Russians, whom the Kremlin has tried to shield from direct consequences arising from the war, are starting to feel the pinch.
Predictably, Russia has tried to evade the price cap, with increasing success. On average, the price of Russian oil has lately risen above the $60 cap, though it remains substantially below the Brent benchmark. The danger now is that Russia will start to recover some of its energy revenue, which would extend its ability to wage its illegal and bloody war.
A broad group of experts organized by Stanford University, including economists and energy specialists,for tightening the energy sanctions. The group’s proposals include technical measures to stop Russia from using seaborne shipments of crude not subject to the cap — an unregulated “shadow fleet” of tankers that carries around a third of Russian seaborne oil. Perhaps the toughest measure to turn the screws on Russia would be to gradually lower the oil-price cap — eventually even by half.
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