Hitting the Weakest Link: What Consequences to Expect from Sanctions on Russia's Oil Industry

A blow to the weakest link: what consequences to expect from sanctions against the Russian oil industry Victoria Grabovskaya

The United States imposed another package of sanctions against Russia on January 10. This time they focused on restrictions in the oil and energy industries. Russia will feel the consequences of these sanctions in the near future.

Economist Maxim Blunt told 24 Kanal that the biggest blow of this sanctions package will be to the Russian company Gazprom. At the same time, the golden age of this company is gone forever, because of this Gazprom is forced to cut its staff by almost half.

The crisis has already begun

Blunt noted that the US Treasury Department imposed sanctions against Russian companies Gazprom Neft and Surgutneftegaz.

Previously, Russian oil companies were not under sanctions – only individual gas projects. This package of sanctions also included an enterprise that specializes in liquefied gas, Gazprom and Novatek.

The consequences of these sanctions will be serious, first of all, for Gazprom – this is the weakest link, and since 2023 it is a deeply unprofitable company. There is no official report for 2024 yet, but judging by the quarterly reports, nothing has changed, – he explained.

The hole that appeared in Gazprom was also partially compensated by Gazprom Neft, the company's oil division, whose profits covered the gigantic losses of the gas sector. .

Now Gazprom Neft itself has come under sanctions. At the very least, there will be interruptions in receiving foreign currency earnings. Also, 183 tankers, which the US considers a shadow fleet, have come under sanctions. At least a third of them have already stopped, the economist noted.

China alone, according to him, has three tankers with 2 million barrels of oil on board, which Beijing refuses to accept in its ports. India has said it will not accept tankers chartered after January 10.

The Russian oil sector may experience serious problems at least temporarily. And then all this will affect the Russian economy, because Gazprom's losses will have to be covered by the entire world by paying an inflation tax, – Maxim Blant emphasized.

He added that the crisis in Russia has already begun: there is a decline in real incomes of the population. Also, real pensions have decreased by 5 – 7%.

Recall that on January 10, the United States introduced the most extensive sanctions against Russia – primarily on the oil industry. Restrictions were imposed on more than 400 individuals and organizations in the Russian energy sector.

In particular, against Gazprom Neft and Surgutneftegaz. Also Ingosstrakh and AlfaStrakhovanie, which insure tankers transporting oil.

14 members of the board of directors of Rosatom, involved in illegal control over Zaporizhzhya NPP, were subject to sanctions.