Russian embargo on oil and gas exports will crush the West

Russia should urgently embargo oil and gas exports to EU to crush the West

Russia urgently needs to impose an embargo on oil and gas supplies to the EU. This will give Russia an opportunity to strategically weaken "unfriendly states".

Russia does not need either dollars and euros under Western sanctions

By supplying gas and oil to the EU, Russia receives billions of dollars and euros per month.

According to Josep Borrell, the EU pays Russia about one billion euros on a daily basis.

Since the beginning of the special operation in Ukraine, the European Union has wired 47 billion euros to Moscow for fuel supplies, Turkey's Anadolu news agency reported.

"The EU pays Moscow $450 million for oil and $400 million for natural gas every day," analysts calculated.

However, due to anti-Russian sanctions, there was a sharp reduction in imports. According to experts' estimates, imports have been halved. Therefore, Russian importers no longer need foreign currency in such large quantities as before, since restrictions have been imposed on:

  • currency purchase,
  • withdrawing currency abroad to pay dividends and invest in shares,
  • currency cash withdrawals.

The Central Bank of the Russian Federation does not need currency either — the Bank can no longer invest in gold reserves, nor can it lend and borrow currency.

In a nutshell, the dollar and the euro have ceased to perform payment and savings functions in Russia indefinitely. To paraphrase the famous phrase: the ruble has no exchange rate, it has a path. The path is to become an international means of payment.

Russia should not support enemies' economies

Therefore, Russia, by selling oil and gas to the West, supports "unfriendly" regimes — enemies, in fact.

"Gazprom has completely suspended gas supplies to Bulgaria and Poland. We should do the same in relation to other countries that are unfriendly to us," Russian Parliament speaker Vyacheslav Volodin wrote on his Telegram channel on Wednesday.

This is "the right decision, and State Duma deputies support it," he added.

Oleg Barabanov, Program Director of the Valdai International Discussion Club, Head of the European Union Policy Department at MGIMO, noted for Pravda.Ru that everything is heading in that direction.

"There is a war going on, and under war conditions it is much more important to hurt the enemy, rather than make as much money as possible," the specialist said.

The expert believes that the cessation of oil and gas supplies to the EU, as well as nuclear fuel for nuclear power plants in former socialist countries, can be Russia's economic weapon that Moscow should have resorted to a long time ago."

According to Oleg Barabanov, one is left to hope that Russia will not try to make some extra money as was the case in 2014.

Oil and gas embargo will cause hyperinflation in the EU

Europe may stop purchasing Russian oil in 5-7 years, but any sudden movements may trigger destructive consequences throughout the European Union.

Russia supplies 30 percent of world's crude oil and 40 percent of petroleum products to the EU. At the same time, there is no region in the world that would have free capacities to increase production and supplies to fill in the gap that would be created in the event of the Russian embargo.

There is little free oil and gas on the market, and the EU will be forced to buy Russian oil anyway, albeit through, for example, India. Poland has already switched to buying Russian gas through Germany.

Gazprom said that Poland still buys Russian natural gas in reverse through the Yamal-Europe gas pipeline. It goes about 30 million cubic meters per day, which almost exactly corresponds to contracts with Gazprom Export in the previous days.

The EU will switch to LNG and tanker oil, but shipping is much more expensive. In addition, there will be a markup to repurchase gas from established markets. Therefore, Russian supplies and revenues will not suffer much, whereas the EU will be forced to pay 20-40% more for fuel, which will accelerate inflation accordingly.

Russia needs to land the first punch

Today, the West is more vulnerable than ever:

  • inflation is tearing up US and European debt markets;
  • central banks lose control over money markets;
  • the size of the debt burden in Europe and the United States is overwhelming.

Therefore, Russia needs to land the first punch, and she must try really hard at this point. Debt markets don't like inflation (premium rises, bonds depreciate), and the Russian embargo will provoke prohibitive inflationary pressure. This will cause debt markets to collapse and give Moscow an opportunity to strategically weaken and in fact, crush its enemies. The ability to survive in the West is very low as the Western economic system is speculative, but not real.

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Author`s name Lyuba Lulko
Editor Dmitry Sudakov