Financial sanctions against Russia have been in effect since the invasion of Ukraine. Westerners freeze Russia’s central bank reserves.
Since then, the stability of the Russian currency ruble has depended only on strong capital controls and the continued flow of oil and gas sales.
However, it is an uncertain system, which can be easily broken by another negative push.
The European Union (EU) has already created an alliance with buyers. After much debate,
EU member states have decided to stop buying Russian oil by ship for only five months from now.
Russia is still exporting 1.25 million barrels of oil a day by sea.
Reducing Russia’s oil exports by sea could have a major impact on Putin’s revenues, the strength of the ruble and Russia’s economy.
But it would not be right to wait five months to stop Putin from fighting. Every day, Ukrainians are being killed by Russian forces.
Now is not the time to wait. Strategies need to be finalized to reduce the price of unrefined and refined products in Russia.
This will reduce the Kremlin’s revenue.
Last May, the EU bought more than িয়ন 5 billion worth of crude by sea from Russia alone.
The EU is also on track to buy equivalent crude this June. Putin is getting ড 100 per barrel of oil, which he can use directly in the war.
The ruble also holds a stronger position than other currencies.
Conversely, if Russian oil exports to the rest of the world were stopped by EU-owned, EU-insured or EU-funded ships,
Countries that do not comply with the ban will have to buy oil at a higher price.
If the EU stops buying oil for the next five months and stops transporting Russian oil on ships insured and financed by the EU,
the UK and its allies, Russia’s oil supply will be reduced.
The issue discussed among EU members and all members are being encouraged to comply with the ban.
The marginal cost of Russian oil production is low. Russia may refuse to supply oil at lower prices if it restricts tariffs on oil exports.
It should noted that earlier during the Corona epidemic, oil prices fell below ২০ 20 a barrel. If Russia “shuts down” oil production,
its oil mines will suffer. Russia could even drop out of OPEC Plus, an alliance of oil-producing members.
It will hurt Russia’s economy quickly and the ruble will collapse.
Without Russia’s hard currency (there is no risk of devaluation or massive price fluctuations),
Putin will not be able to buy rockets and other weapons from other countries. Russia will then have to print new notes.
As a result, inflation (purchasing power) will increase in the country.
The West has taken great steps to stop Putin’s war in Ukraine. Now these have to implemented.🔱