Russia said on Thursday that it was suspending, until the end of this year, exports of more than 200 products, including technological and medical equipment, vehicles, and agricultural machinery, but oil, gas, and coal - the main revenue stream for the government – were spared from the list.
The measure - which also includes the suspension of exports of electric equipment, railway cars and locomotives, containers, turbines, metal and stone cutting machines, video displays, projectors, consoles, and switchboards—“is necessary to maintain stability on the Russian market,” the government said in a statement.
“In addition, the Government has also suspended the export of several types of timber and timber products to states that are undertaking hostile actions against Russia,” it added.
Russia’s economy is becoming increasingly isolated because of the sanctions on its banks and central bank and the long list of companies leaving Russia or stopping sales in the country in the wake of Putin’s invasion of Ukraine. From the biggest international oil companies to consumer product makers and Apple and McDonald’s, everyone is quitting Russia.
Moscow is now retaliating against the sanctions the Western allies have imposed.
Yet, just as Europe has been wary of slapping sanctions on Russian energy, Russia is equally wary of cutting off its largest revenue - energy.
Crude oil and natural gas revenue accounted for 43 percent, on average, of the Russian government’s total annual revenue between 2011 and 2020, according to data compiled by the U.S. Energy Information Administration (EIA).
The Russian Energy Strategy to 2035 prioritizes the increase in energy exports and revenue, which is indicative of the central role hydrocarbons play for the Russian government, the EIA notes.
Russian energy exports, however, have already been struggling to find buyers, even before the United States banned imports of Russian energy on Tuesday.
The U.S. decision to ban imports of Russian oil is likely to worsen Russia’s struggles to sell its cargoes as buyers will avoid Russian crude even more than they have been doing so far, traders told Reuters earlier this week.
Although the U.S. ban will directly hit only a small amount of Russian oil exports, the indirect hit could be much higher because a growing number of traders and buyers will be shunning Russian crude due to “self-sanctioning” and reputational risks.
By Tsvetana Paraskova for Oilprice.com
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