Russia has won the oil war

The West doesn’t seem too keen to enforce its $60 price cap on Russian crude

editor: REMIX NEWS
author: Péter G. Fehér
Russian President Vladimir Putin smiles while speaking to the media after the Russia-Africa Summit in St. Petersburg, Russia, Saturday, July 29, 2023. (Alexei Danichev, Sputnik, Kremlin Pool Photo via AP)

Moscow’s leadership may not have been cheering loudly, but they probably still celebrated quietly within the walls of the Kremlin. After all, Russia has won the oil war. The news has been widely reported among economists and even in Western press, but it cannot be said to have come as a surprise shock. Those involved in the global oil business knew that they could not win such a war against Russia.

The United States and the European Commission’s measures to reduce Russian energy exports aimed to produce problems for the Russian treasury by reducing its revenues. However, it seems that the punitive measures introduced without any impact assessment have been seriously misguided, especially on the part of the EU. Rather, the EU has punished itself by foregoing cheap Russian gas and being forced to buy expensive U.S. natural gas.

Strange as it may sound, the Brussels officials knew exactly that this would be the consequence of the sanctions they imposed. It is worth looking to Russia expert Christopher Davis, professor at Oxford University: Davis has claimed nothing less than that the European Commission only began to address the impact of the punitive measures after the sanctions against Russia were introduced. At that time, it produced a secret study that was not shared with EU citizens. It said that the decisions were taken too quickly and that they were taken under political pressure without any prior economic impact assessment. The EU thus did not look into the potential impacts of sanctions; it was in essence an abrupt and thoughtless decision.

Moscow, meanwhile, looked for other buyers of its black gold, which was also predictable, and China was one of the first to come forward. Moscow has now built infrastructure to handle the increased traffic between Russia and Asia. Before the war in Ukraine, China was buying 1.5 million barrels of oil a day from Russia. Today, it takes in 2.5 million barrels a day.

Now, publications such as the Wall Street Journal are acknowledging that Russia has achieved a real global victory in the oil wars. The price of the Russian Ural blend oil has for the first time exceeded the $60 cap per barrel imposed by the U.S. and its allies last December. Although this happened just last Thursday, there is no sign that anyone is willing to enforce the sanction.

It is now no longer a mere assumption that the EU and the U.S. have made spontaneous sanctions decisions against Russia with unforeseen consequences. It is understandable that the European Commission does not want to publicly admit the consequences of such clumsy measures.

The question has to be asked again, for the umpteenth time: Why are there no consequences for a disastrous decision taken by the European Commission that once again went over the heads of the member states without even consulting them?

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