Western countries imposed some sanctions on the Russian Federation and some Russian individuals since the start of the invasion of Ukraine. But Russia can still sell oil on the international markets and China and other non NATO countries will probably buy that oil.

Is it possible that due to the recent surge in oil prices the oil and gas revenues eventually compensate the losses due to the sanctions? Did the western countries take into account such possibility when they devised those sanctions?

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    It probably depends on how much oil and gas Russia is selling currently. If they sell less and OPEC is selling more, it will be mostly Saudi Arabia opening bottles of Champagne right now. Commented Mar 8, 2022 at 10:23
  • Part of the price increase would also have happened without the sanctions, just because of the uncertainty. Prices already increased before the war. It all depends on how much Russia is able to sell currently. Commented Mar 10, 2022 at 12:29
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    Here are some Bloomberg news that suggests that Russian oil is currently only offered at discounts like $11-15 relative to standard oil prices and might not even sell there. Russian Oil Is Increasingly Becoming Untouchable for Traders and More Russian Oil Deeply Discounted as Ban Risk Alarms Buyers Commented Mar 10, 2022 at 13:06
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    @Trilarion 15$ Discount on a price that recently rose by 50$ is a good deal.
    – FluidCode
    Commented Mar 13, 2022 at 9:55
  • But only if you sell as much as before. $50 more for Saudi Arabia and with the possibility to sell even more volume is by far the better deal. This war makes the Saudis quite a lot richer. With Russia I'm not so sure. Also for the sake of the question one would have to compare to the oil price without sanctions. Nobody knows but surely the oil price would be high under all circumstances. Commented Mar 13, 2022 at 11:08

4 Answers 4


Yes. That is why there are no comperehensive sanctions on oil and gas yet. To make this work, there would have to be sanctions on customers of Russian oil. According to Reuters:

Asked if the United States has ruled out banning Russian oil imports unilaterally, Blinken said: "I'm not going to rule out taking action one way or another, irrespective of what they do, but everything we've done, the approach starts with coordinating with allies and partners," Blinken said.

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    Actually the linked article is not clear on the point of this question. From that I can only understand that anything they say backfires because it triggers further price increases.
    – FluidCode
    Commented Mar 8, 2022 at 8:50
  • @FluidCode, explained the paragraph I was referring to.
    – o.m.
    Commented Mar 8, 2022 at 9:54

As far as I am aware, there are no sanctions on oil or gas yet.

Instead, the sanctions come in two flavours: one is the part where Russian banks are cut off from the international banking system and Russian overseas assets (read: money) are being frozen; the second is restrictions on the trade of certain goods. The former needs little explanation.

Importantly, both the import and export of certain goods into/out of a sanctioned territory may be sanctioned and the lists need not be identical. When choosing which goods cannot be imported into the sanctioned territory (from the sanctioning nations) the following aspects are considered:

  • how much the sanctioned economy relies on importing these goods as opposed to self-production
  • whether the sanctioning nations supply a significant fraction of these goods
  • who will be most directly impacted by the lack of these goods (i.e. sanctioning food imports will likely impact the people directly, while sanctioning materials used for high-tech industry solutions will impact the industry and proprietary class more)

Conversely, when considering exports from the sanctioned territory the considerations are almost opposite:

  • how much do the sanctioning economies rely on these goods from the sanctioned country; can they cover their demand by tapping into other markets easily
  • how much does the sanctioned economy rely on exporting them; can they access other markets easily
  • what impact does the export of the goods have on the exporting economy

In the case of Russia, most of the nations doing the sanctioning (the US, Canada, Japan, South Korea, Australia, the EU, etc.) are highly developed nations while Russia itself is typically not classified as highly developed and instead still strongly relies on natural resources. Therefore, prime targets for goods that can no longer be exported out of Russia would be oil, gas and minerals. On the other hand, prime targets for import sanctions would be high tech, manufactured end-products and the like, which Russia is unlikely to be able to source elsewhere and cannot reasonably quickly source domestically.

This in turn means that reducing Russia's income by hitting its exports is only part of the puzzle. A much more significant portion is reducing Russia's ability to import other goods that it might need. For example, it is highly likely that Russian airlines will struggle to maintain their Airbus and Boeing jets as many of the necessary parts might be sanctioned (this was the case for Iran and led to an amusing issue when a long-distance flight experienced a technical issue and performed a safety landing in Iran: flying in the necessary parts to repair that aircraft might have run afoul of the sanctions. I do not remember how that story ended).

So of course, a small part of the sanctions (sanctioned exports, thereby lost income for Russia) will be offset by higher oil and gas prices meaning these hitherto unsanctioned goods will be more profitable; but there is far more to the big picture than just this minor issue (which may well have been priced in a priori).

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    The US sanctioned Russian oil today. bbc.com/news/world-us-canada-60666251 Commented Mar 8, 2022 at 22:20
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    @Fizz But that doesn't mean that Russia cannot sell the oil somewhere else for a relatively high price. Just not to the US. Commented Mar 10, 2022 at 12:27
  • "As far as I am aware, there are no sanctions on oil or gas yet." The reactions of the markets to any announcement about sanctions was a sharp rise in oil prices even if those sanctions were not on oil and gas.
    – FluidCode
    Commented Mar 10, 2022 at 18:56

I was initially optimistic on that but a recent article from The Guardian shows that Russia even DOUBLED their revenue from oil sales, regardless of all sanctions already in place. Less oil has been sold but for higher prices.

This is obviously unfortunate but we do not know how will this evolve in the long run.

When the fish gets smelly and many customers stop buying it, can the seller get the same revenue just by asking higher price for the now smelly fish? A free market specialist would probably say "unlikely."

When the oil smells of blood and customers stop buying it, what is the difference?

  • Doubled revenue with smaller volume of product sold implies much more than doubled profit. I suppose that explains how they can afford to stop selling gas to Bulgaria and Poland.
    – phoog
    Commented Apr 28, 2022 at 7:36
  • This answer seems to imply that the world should just stop buying Russian oil, but so far did not? The question is why? My argument would still that one should compare to the situation without sanctions and then revenue would be even higher. Invading somebody seems like a lucrative business if you are selling stuff that increases in price under these circumstances. But that doesn't mean that one should not sanction them, maybe it rather means sanctions should be tougher. Commented Apr 28, 2022 at 8:35
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    The second part of your answer looks like wishful thinking. China and India might argue that pecunia and oil non olet.
    – FluidCode
    Commented Apr 28, 2022 at 10:18

Russia provides about 10 % of the global oil supply. This is far from the position of the monopolist who could raise the price multiple times to "compensate" for something and everyone would pay. Source, source.

Russian oil is not particularly desired, because of existing and potential sanctions that may hinder the purchase, delivery or payment. Russia tries to force push it with huge discounts and still cannot always find a buyer. Tankers do not want to transport it, banks do not want to handle transactions for it, insurance providers do not want to insure business around it. Not forbidden but too much of the headache.

Oil prices have declined during recent years, at times even as low as getting negative (yes, "we pay money for you to take our oil we cannot stop producing swiftly enough", source). For some, bans for Russian oil are more solution than a problem, to prevent other oil industry from closing.

Really bad time to ask paying more for this oil.

  • Are there somewhere price comparisons for oil from different sources. How much more or less does Russian oil sell for compared to for example Saudi Arabian oil currently? Commented Mar 10, 2022 at 12:13
  • Found oilprice.com/oil-price-charts and Russia has two crudes although the Sokol crude price seems to have under-performed lately. Also the transaction volumes aren't given there. Commented Mar 10, 2022 at 12:22
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    The price in your charts may be that is paid for Saudi Arabia. From my two sources look like Russia needs to offer significant discounts ($20 per barrel or about).
    – Stančikas
    Commented Mar 10, 2022 at 13:33
  • The western world is just a small part of the world. Russian tankers or tankers of any Asian country would not necessarily refuse to transport Russian oil. Furthermore if China or India would have to pay steep prices for Arabian oil if the Russian offered a price that is slightly lower they would consider the offer.
    – FluidCode
    Commented Mar 10, 2022 at 19:01
  • @FluidCode Maybe or maybe not. Nobody knows and we will see how much oil Russia will sell in the next time. Commented Mar 10, 2022 at 23:10

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