Oil Price Lowering Was Three Times as Powerful as Sanctions

The IMF (International Monetary Fund) said the fall in oil prices from 2014-2018 hurt Russia’s economy three times more than the sanctions.

Russia’s economy is 60% oil and gas exports. 2.3 million barrels per day is exported from Russia to Europe.

The IMF estimated in August 2019 that sanctions led growth to fall short of expectations by about 0.2% per year since 2014. In comparison, according to IMF estimates, the decline in global oil prices caused Russian growth to be about 0.6% lower than expectations each year since 2014.

The United States and its allies have sustained sanctions on Russia since its 2014 invasion of Ukraine, and these sanctions are supported on a bipartisan basis in Congress. As the United States and other countries consider the possibility of new sanctions on Russia, debates about the impact and effectiveness of existing sanctions persist. Despite almost eight years of escalating sanctions,
Russia has deepened its hold over Ukraine’s occupied Crimea region and separatist regions in eastern Ukraine.

The US historically increased crude oil production from 8.5 million barrels per day to 13 million barrels per day from 2016 to MArch 2020. Currently, the US is down about 1.4 million barrels per day in oil production.

Qatar exported 77.1 mmty of LNG (liquified natural gas) in 2020. and its costs to produce LNG are among the lowest in the world. Qatar reached an FID on the nearly $30 billion NFE earlier in 2021, the largest LNG project to be sanctioned in the world. The project would boost Qatar’s overall LNG production capacity to 110 mmty from 77 mmty.

LNG exports and import facilities take years to make. There would also need to be some pipelines to reach Eastern European customers.

US can supply oil with increased production and increase natural gas to remove demand from the Americas.

Europe has to increase nuclear energy to displace natural gas for electricity. Half of Germany’s natural gas imports can be reduced by using three reactors that were placed into shutdown in January 2022. All nuclear reactors have refueling every 18-24 months. It is usually 3 weeks to refuel a reactor. France can shift any refueling into the spring or summer. This should normally be the case anyway.

SOURCES- FAS, EIA
Written By Brian Wang, Nextbigfuture.com