Economic effects of the Russo-Ukrainian War

My only question is if they can sell as much as they sold to EU, at what price and for how long? I know that the main partners are China and India, but they need a small fraction of what EU needs.
The EU already imposed an embargo on Russian oil

All seaborn oil deliveries have been shut down already, or will be shut down by the end of the year. The pipeline oil deliveries, while still legal are only a sliver of Russian exports.

And it's already worked around by shell companies.


And by 3rd state intermediaries - India, China and other countries not only buy Russian oil and gas for themselves, but they also export them to the west.


Most recent post from this thread alone, but if You dig deeper, You will find more examples from other countries as well.
So this G7 price cap is an empty gesture - Russia will continue to sell oil below average market price to those intermediaries and they in turn will resell it to the west above the average market price (price cap or not).
As long as there's no increase in oil (and gas) production in the U.S, Canada and OPEC, Russian revenue won't fall down even a bit.
 
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Max Roscoe

Ostrich
Orthodox Inquirer
“Companies that impose a price cap will not be among the recipients of Russian oil,” Kremlin spokesman Dmitry Peskov told reporters in a conference call, endorsing comments made on Thursday by Deputy Prime Minister Alexander Novak.
“We simply will not cooperate with them on non-market principles,” Peskov said.

Haha, so much for that plan!
G8 countries probably spent weeks coming up with this scheme to dEfEaT pUtLeR and the plan is thwarted before it even started.
 

Zanardi

Kingfisher
Orthodox
I wouldn't be so sure it's a bad plan and here is why:
  1. Capping the oil price removes the possibility of transport insurance because this insurance is valid only if the price is above a level. Russia cannot do anything about it;
  2. Again: what will Russia do with the remaining oil supply? So far, they are burning most of it. And a day will come when countries like China and India won't want any more oil, because their supplies are full. Not to mention the discount Russia must apply to be able to sell their oil;
  3. (Continuation of the above point) Russia must either burn the excess oil and gas (which they're doing) and/or close a part of their refineries and oil wells. Restarting them will cost a lot of time and money.
So far, Russia's response seems like blackmail to me, because they cannot do anything about it.
 

McKinnsley

Sparrow
Other Christian
I wouldn't be so sure it's a bad plan and here is why:
  1. Capping the oil price removes the possibility of transport insurance because this insurance is valid only if the price is above a level. Russia cannot do anything about it;
  2. Again: what will Russia do with the remaining oil supply? So far, they are burning most of it. And a day will come when countries like China and India won't want any more oil, because their supplies are full. Not to mention the discount Russia must apply to be able to sell their oil;
  3. (Continuation of the above point) Russia must either burn the excess oil and gas (which they're doing) and/or close a part of their refineries and oil wells. Restarting them will cost a lot of time and money.
So far, Russia's response seems like blackmail to me, because they cannot do anything about it.
It would be fine if 70% of the world didnt care about virtue signalling. I hope you have sufficient supplies of fuel for this winter.
 

Foolsgo1d

Peacock
Look at all of this through the lens of Deagel predictions. The West is being targeted for destruction.

I cant really fathom how capping prices reduces energy costs but its just typical political speak made by people not in on the WEF true mission goals.

Things will shut down and be diverted. China and India will then re-sell cheap oil and gas for higher like they're doing now. Not one single Western economy could survive $200/barrel over an extended period given the previous few years.

Other economies would fail first and cause their own problems too.
 

Zanardi

Kingfisher
Orthodox
Their government has the cash right now to subsidise food, and as long as they have oil and energy money, they can keep subsiding.

“But what the price of energy will be next year is anybody’s guess. It will get a lot harder for them from next year onwards.

“At some point I believe their economy will be in very bad shape, either next year or the year after.

“But that depends on the price of energy.

“The rouble is doing OK because they are making people only buy and sell using the rouble. That will keep the currency strong for a while.”

Let's see how Russia will do afterwards.
 

911

Peacock
Catholic
Gold Member
They will do even better economically, because they are in the process of replacing multinationals that left the domestic market like Renault or Toyota with domestic brands, including across a whole range of consumer products, from food to clothing to furniture and so forth. This year was supposed to be the hardest, it's smooth sailing after that once they have had the time to put together a broad domestic industry.

The kind of problems they will likely run into is from having too strong a currency and other repercussions from high energy exports (aka the Dutch Disease), and from running out of domestic labor. Those are the kinds of problems any industrialized country would love to have.
 

Max Roscoe

Ostrich
Orthodox Inquirer
It's really odd to me that a country that had a revolutionary government take over the apparatus of power by using armed military groups to stage a beer hall putsch would not outlaw using the army to take to the streets for law enforcement.

I mean, I think they have purged most dissidents from the German armed forces, but if there is any place with the highest concentration of them, the army is one of the first places I would look.... it's kinda like they learned nothing from 1945.
 

911

Peacock
Catholic
Gold Member
They will do even better economically, because they are in the process of replacing multinationals that left the domestic market like Renault or Toyota with domestic brands, including across a whole range of consumer products, from food to clothing to furniture and so forth. This year was supposed to be the hardest, it's smooth sailing after that once they have had the time to put together a broad domestic industry.

The kind of problems they will likely run into is from having too strong a currency and other repercussions from high energy exports (aka the Dutch Disease), and from running out of domestic labor. Those are the kinds of problems any industrialized country would love to have.

One important follow up on the domestic economic front for Russia: gas prices in Russia are going to be nearly 30-40 times lower than in the rest of Europe. As a result, Russia is going to have a HUGE competitive advantage in producing any item that requires a lot of energy to make, like cement, aluminum, steel, fertilizer, paper etc.

So their exports in all of these areas are going to BOOM. If they can't export gas directly to the West, they will export it indirectly on the world market, all these products being fungible.
 

Max Roscoe

Ostrich
Orthodox Inquirer
Don't forget oil. Oil is the primary component of common products like plastic, asphalt, synthetic rubber, detergents, pesticides and herbicides, paint, and carpet. Only about half of oil is converted into gasoline.

Russia is producing almost 10 million barrels of oil a day. Worldwide demand is about 90 million barrels, so Russia is producing over 10% of the total supply. I'm not sure western nations are even bright enough to understand banning Russian petroleum doesn't stop their oil being sold and converted into, say, Chinese plastic. Oil is priced on a global exchange, so 100% of Russian oil could be turned into plastic and it has the same economic result as if it were all turned into gasoline.

 

Pointy Elbows

Kingfisher
Orthodox
Don't forget oil. Oil is the primary component of common products like plastic, asphalt, synthetic rubber, detergents, pesticides and herbicides, paint, and carpet. Only about half of oil is converted into gasoline.

Russia is producing almost 10 million barrels of oil a day. Worldwide demand is about 90 million barrels, so Russia is producing over 10% of the total supply. I'm not sure western nations are even bright enough to understand banning Russian petroleum doesn't stop their oil being sold and converted into, say, Chinese plastic. Oil is priced on a global exchange, so 100% of Russian oil could be turned into plastic and it has the same economic result as if it were all turned into gasoline.

This is exactly why the energy price spillover could reach north America and all points of the globe in the out-months. Fungible markets eventually stabilize internationally, with all consumers paying market price (barring nationalized countries). The US might make it through the winter with moderate energy price increases, but next summer we will be catching up, if things don't change. Personally, I don't see how my business could endure a 10X energy bill. I can pass along only so much to my customers, then the deal isn't sweet enough for anyone. We are reaching the elastic break-point already. No way a little coffee shop can pay 10K Euros a month for power. I can already make a pot of coffee at home for a fraction of a ridiculous starbucks.
 

911

Peacock
Catholic
Gold Member
^Natural gas is not quite as fungible, most of it is carried in pipelines overland on relatively short distances, as opposed to oil which is easily and cheaply shipped halfway around the world. And gas has a much wider share of power generation than oil. In the US there is plenty of natural gas for the domestic market. The question is how much of that will be processed to be liquefied and shipped over to European markets.

In the short term, not that much, because that process requires a lot of time and investments at both the seller and buyers end. The main problem in the US, as in the UK, is speculation, with all utilities and power companies being private. Much like in other industries like healthcare, higher ed or defense, it's all about extracting as much money from consumers.

The other problem is the woke administration and Wall Street pushing ESG, getting in the way of providing US consumers and industry cheap and easy access to North American hydrocarbon resources.
 
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