Sanctions on Russian oil have failed – the US should be aware

The UK’s Foreign Minister Lord David Cameron stated this week at Davos’ World Economic Forum that it is determined to mobilise more support for Ukraine as it continues to fight Russian aggression.  

That this should still need to be stated, over a year on from Russia’s invasion of Ukraine, is evidence enough that EU sanctions on Russian oil have failed.  

During the first year of the war, Russia earned $218 bn in oil revenues - this at a time when Europe was still buying about 50% of Russian exports. The Kyiv School of Economics, which has been monitoring Russian oil income, has valued Moscow’s oil sales for this year at $178bn.  

This is hardly an example of successful sanctions - and it is due to the shadow-proof tankers. The Russians have accumulated a fleet of these which do not require Western or G7 involvement in terms of ownership, insurance, or any other services. They are essentially sanction-proof, despite the $60-per-barrel price cap placed on them last year. These sanctions could therefore be seen as token measures.  

The US has now replaced Russia as Europe’s top crude oil supplier.  

Set this against the current geopolitical backdrop in the Middle East. To understand the implications of escalations in the region, it bares considering what the US involvement in stopping Houthi rebels means.  

The main type of trade going through the Red Sea is shipping containers from China to European ports. To avoid the threat of attacks, US ships must travel around the horn of Africa or through the Pacific. Either of these routes implies a 5-10% increase in shipping costs to the US economy, which can easily be absorbed and a minimal 2–3-week extension on travel time per trip.  

So, attacks on shipping are an issue for Europe, which does require resources sent to deal with the backlog of supplies being sent to the bloc, not the US.  

It stands to reason that part of the rationale behind US involvement could be a distraction from domestic malaise.  

With every war that passes, the mainstream media starts propagandising the wars, explaining why they’re a huge threat. There is a prime example in the dispute in the Essequibo region between Guyana and Venezuela. While talks were being brokered in the Caribbean, English-speaking media kept a low throb of warmongering headlines in circulation. More generally, the media will delight in engaging in threat inflation, a prompt for the average American voter to slowly start shifting mentality from antiwar to pro-protectionism.  

Whilst the media manufactures consent, the US can concentrate on winning an election.  

If the price of gasoline continues to rise significantly, Biden will not win the election. By necessity, Russian oil must reach global markets. The Institute of International Finance (IIF) has shown that China, India, and Turkey are potentially transshipping crude or refined products to Western markets. No wonder the US has chosen to lift the sanctions on Venezuela.