By Rostyslav Averchuk
Lviv, Jan 16 (EFE).- Ukraine considered the latest sanctions introduced by the United States against Russia’s oil exports and energy sector as an important step towards undermining its ability to fund the war yet warns of the need to ensure compliance and take further steps, including bringing the price cap on Russian oil to 30 dollars from the current 60 dollars.
“Targeting 183 Russian oil tankers and two key companies is a serious move, especially because (unlike in the case of similar sanctions by the United Kingdom and the European Union) it threatens secondary sanctions against those companies that deal with them in any way,“ Andriy Klymenko, from the Black Sea Institute for Strategic Studies, told EFE.
However, he cautioned against excessive optimism about its eventual impact on Russian oil trade revenues – estimated at 193 billion dollars in 2024 by KSE Institute, a think-tank at Kyiv School of Economics.
“No one can accurately predict the overall effect due to the sheer number of affected tankers and companies. Russia will also try to counteract them. Other, more decisive, measures are needed,” Klymenko warned.
A welcome step yet more needs to be done
A well-enforced cap on Russian oil price and its further reduction to 30 dollars a barrel, from the current 60 dollars are key to ending the war in Ukraine, according to Andriy Yermak, head of Volodymyr Zelenskyy’s Presidential Office and co-chair of the McFaul-Yermak Group of experts on sanctions against Russia.
“The McFaul-Yermak Group proposes fixing the price of Russian oil at 30 dollars. We will also welcome any ideas of the newly elected US President Donald Trump and his team on reducing global oil prices,” Yermak posted on his Telegram channel.
Even at a lower price, Russia will keep exporting oil, leading to no drastic changes in global supply, according to him.Meanwhile, a major drop in oil earnings (responsible for over 30% of state revenues and a key source of currency) will decrease its ability to cover its war and other expenses and to buy key military equipment abroad, Yermak underlined.
Compliance not guaranteed
The latest sanctions could provide significant leverage to US president-elect Donald Trump if he begins talks with his Russian counterpart Vladimir Putin soon, Klymenko noted.
However, although they could undermine the volume of Russian oil exports, Klymenko is skeptical about the ability to enforce the price cap, given how Russia has consistently evaded it for years.
“I simply do not see any way of effectively controlling financial flows,” he told EFE.
The ships’ owners will also try hard to have sanctions lifted based on technicalities.About a fifth of the 156 tankers that were sanctioned previously have remained active, according to the KSE Institute, driven by demand from India, China, and Turkey.
Moreover, Russia will likely attempt to disrupt global oil supplies to drive up prices and recoup its potential losses, Klymenko said.
He pointed out to reports that Russia is considering sending advanced weapons to the Yemeni Houthis who are attacking tankers in the Red Sea, and warned that it could restrict the transit of Kazakh oil to Europe through its Novorossiysk terminal.“
I hope that our partners and other countries are preparing for this scenario, and increase oil supply to counteract the use of oil as a weapon by Russia,” he explained.
More decisive measures
More decisive measures, such as restrictions on the age of tankers carrying Russian oil through the Baltic Sea, could be more effective than the sanctions and attempts to enforce a price cap, according to Klymenko.
This would be justified in wartime, he underlined, noting that the invasion of Ukraine will last for as long as Russia can continue its lucrative oil exports.
The decision by eight countries (Finland, Poland, Denmark, Sweden, , Estonia, Lithuania, and Latvia) to toughen security in the Baltic Sea, following a series of incidents involving underwater cables, as well as an explicit recognition that Russia’s tankers threaten maritime and environmental security is a step in the right direction.
“I hope this will reduce the number of tankers carrying Russian bloody oil,” Klymenko noted. EFE
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