“Playing the Oil Lever: The EU and US together can strip Moscow of its oil revenues”, Alan Riley (CIDOB, Barcelona)

The EU and US has more leverage that first appears to deny or strip Moscow of its oil revenues. And it can take such steps knowing that there will be only a limited economic impact on European consumers. Russian oil exports to the European Union are approximately 3 million barrels per day(mbd). Total Russian oil exports are around 5mbd which provide 40% of all Russian tax revenues. The oil sold into the EU is heavy Urals crude, which European refineries are fitted out to take. As a result of the nature of Russian oil sold to Europe, Moscow would face heavy switching costs to sell that oil anywhere else. At the same time the EU and US, together allied states in the IEA have 1.5 billion barrels in the Strategic Petroleum Reserve (SPR). It would be possible therefore to shut off Russian oil exports to the EU, and thereby closing access to 3/5th of Russian tax revenues from its oil exports. Such a decisive step would rapidly undermine the capacity of the Russian state to wage war without imposing enormous costs on the EU or the US.

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