As Russia’s war in Ukraine rages on, analysts are noting that given the windfall profits in energy that Russia is enjoying, sanctions are probably not the deterrent the West would hope for.
Despite the sanctions regime the West has implemented on the nation, Russia appears set to rake in $800 million per day from oil and gas revenues, as prices continue to climb, according to Bloomberg Economics.
Russia’s position has been especially strengthened due to rising oil prices, which are presently up 50% this year, hitting 13 year highs. According to Bloomberg forecasts, these gains, Russia’s oil and gas sales are expected to arrive at a total of $285 billion this year, up 20% from their sales in 2021.
Ironically, mush of these revenues are coming from the European Union, which is so dependent on fossil fuels they cannot help but fuel Russia’s profits with their dependency on the fuel.
40% of the EU’s natural gas consumption comes from Russia. Many EU countries, including Germany, are heavily reliant on the product. On top of that, Europe consumed about 50% of Russia’s crude oil exports, as it consumed 75% of its natural gas exports in 2021, according to the US Energy Information Administration.
Just in the first two months of the Ukraine war, as Europe castigated Russia, the EU spent about $41.5 billion on Russian fossil fuels. The biggest individual buyer was Germany, which spent $8.8 billion, as the Netherlands followed close behind at $6.4 billion, with Italy third, at $4.6 billion.
The Centre for Research on Energy and Clean Air (CREA) has noted, the sanctions regime imposed against Russia has “been undermined by continued fossil fuel imports from Russia, particularly to the EU. Fossil fuel exports are a key enabler of Russia’s military buildup and brutal aggression against Ukraine.”
Although the Centre was mindful of the EU’s attempts to wean itself off of fossil fuels, the Centre added, “These steps will provide a replacement for Russian fossil fuels over the next few years, but they have essentially no effect on Russia’s fossil fuel export revenue in the short term.”
