Expected impact of American curbs on Russian oil

The United States on Friday imposed fresh curbs on Russian oil explorer and producer Gazprom and Gazprom Neft. According to reports this measure is expected to impact imports of Russian oil by China and India, and that the two Asian giants will turn more to the Middle East oil markets, and even American oil sources.

Ever since the Russian invasion of Ukraine in February 2022 and the economic sanctions against Moscow, China and India have emerged the major buyers of Russian oil. It is reported by Western news agency Reuters that 20 per cent of China’s, and 36 per cent India’s, oil imports have been from Russia, and this is bound to decrease with the new sanctions.

The American sanctions were also against 143 ships, mostly of non-Western companies, carrying Russian oil exports. There is the assessment that prices are on the rise for Middle East oil. Russia has however declared that despite the intention behind the American curbs, Russia will continue with its oil and gas production, and it would support a stable global oil market.

A break in the Russian supply could make the global oil markets volatile because of unmet demand. Ukrainian President Volodymyr Zelensky welcome the fresh American curbs and said that this would be a blow to the Russian economy, and it is the effective way of ending the Russian war in Ukraine.

The economic battlefront of the Russia-Ukraine war is more complicated than the battlefront of the armies, drones and rockets of the two combatants attacking each other. The fortunes on the battlefield have been fluctuating in the last three years or so. It depends on the continuous supply of arms and munitions from Ukraine’s Western allies in Europe and America. Zelensky had reminded the allies to keep to their promise of supply of arms because it is a crucial input for the Ukrainian war machine.

The Western allies, it appears, would prefer to weaken Russia economically through sanctions to end the war, rather than continue to supply arms to Ukraine. The issue of intentions does not matter because what matters is the effectiveness of a measure. If the economic sanctions work better to dissuade Russia from continuing the war, then it will be seen as the more effective one. In the end, it is the economic pressure that will be the real factor for the end of the war.

Western powers had been trying for a long time to use economic sanctions as a weapon to browbeat opponents and trading partners. The question is whether the strategy will work all the time. The experience of Russia in the last three years has shown that economic sanctions have not worked well enough to pressure Moscow to end the war in Ukraine.

The world markets are also diverse. It is possible for the United States, Canada, United Kingdom, members of the NATO and a majority of the members of the EU to cooperate in the matter of sanctions against Russia. But this might not work in the case of large economies like China and India., nor with other countries in Asia, Africa and Latin America.

The US and the EU cannot control the global sea-lanes to interrupt the flow of Russian oil. Ultimately, it is diplomacy and dialogue that will be more helpful and more effective in ending the war in Ukraine. The Americans have felt the Ukraine fatigue. Many of the former east European countries, now part of EU, do not entirely agree in the effectiveness of sanctions to stop the war. The US is not any more the dominant power in the world, and it ceased to be a superpower a long time ago. Peace has to be negotiated. It cannot be imposed.