By the Intel Drop

The G7 and EU believed that tightening the screws would mortally wound Moscow, but it seems to have backfired

Joydeep Sen Gupta

In late December, Russian President Vladimir Putin responded to the price cap imposed by Western nations on Russian seaborne crude oil by signing a decree banning its supply from February 1 to nations that support the curb.

e US-led measure, which prohibited countries from paying more than $60 per barrel of Russian oil, came into effect in December. Putin’s response was an unequivocal declaration that Russia would not bow to sanctions pressure. His decree, however, includes the possibility of “special permission” to supply to countries that come under the purview of the ban – potentially a window of hope for some of those 27 EU members that are believed to have been coerced into supporting the price cap.

Redirecting supplies

The West’s cumulative bid to choke the Russian economy has not had the desired effect so far, as the latest figures show. Russia’s budget revenues from the oil and gas industry grew 28% last year, amounting to $36.5 billion. Oil production in Russia rose 2% last year to 535 million tonnes, while exports of the fuel increased by 7.5%.

his was achieved in no small part, thanks to Moscow’s decision to redirect its supplies to India and China, while at the same time incentivizing them to buy Russian energy with hefty discounts. While the country’s net energy export revenues declined by $172 million per day in December, supply quantities to Beijing and New Delhi have surged to an all-time high. Most of the decline came not from oil export revenues, but from pipeline natural gas exports that were eliminated by the sabotage of the Nord Stream gas pipelines.

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