Thug life: Not pouring oil on troubled waters?
For the last few months we have been subjected to Kremlin propaganda claiming that Putin is benefitting from the economic sanctions designed to hurt him and that Europe in particular is suffering from those sanctions. Like all effective propaganda. it has elements of truth. Indeed, a temporary rise in Kremlin oil and gas revenue was entirely predictable given that the sanctions were applied gradually. But what is the situation more recently?
A story in Bloomberg from two months ago contained this rather revealing graphic:
As you can see, Gazprom shipments to its dominant market had only just begun to plummet from over 200 mcm/day (millions of cubic meters per day) for most of 2022 to around 100 mcm/day.
Also, after an uptick in revenue, caused by the higher price of gas, revenue has also plummeted, although it was still round about its normal level.
Nevertheless, even on this data from two months ago, the direction did not look promising for Putin, with falling sales and plunging revenue.
So how about more recent data?
An August 9th story from the US Energy and Information Administration said that Russian gas exports to Europe were now at a 20-year low:
Russia’s natural gas exports by pipeline to the European Union (EU) and the United Kingdom (UK) declined by almost 40% during the first seven months of 2022 compared with the same period in 2021 and by almost 50% compared with the previous five-year (2017–21) average, according to data from Refinitiv Eikon.
On a graph this slump is even more apparent, with the Germans finally getting their act together on sanctions:
Also, although gas prices are high recently, they are still a lot lower than they were in the Zeroes, so the idea that Putin is reaping unprecedented profits, even temporarily, is clearly false:
Source. Price adjusted for inflation
The US is also working hard on hitting Russia's oil revenue by bringing in an internationally agreed price cap on Russian oil with countries like India that are set to take up Russian exports of oil when an EU ban kicks in on December 5th.
As reported by Reuters:
The United States had constructive talks with Indian officials on a proposal to cap prices of Russian oil, U.S. Deputy Treasury Secretary Wally Adeyemo said on Friday, as it seeks global support for a proposal to cut Russian revenue. [...]The Group of Seven richest economies aims to have a price-capping mechanism on Russian oil exports in place by Dec. 5, when European Union sanctions banning seaborne imports of Russian crude come into force.
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