The economic recession in Russia started in 2022 and the negative events will continue throughout 2023. Experts believe that oil prices, which depend on OPEC’s decisions, will have a serious impact on the decline in economic activity in the Russian Federation.
Since oil is a kind of reserve for Russia, the economy of the aggressive country reacts strongly to the prices of oil and other energy carriers. About it in the comment Focus said economist, former member of the NBU Council Vitaliy Shapran.
“With high oil prices, they kept subsidized industries such as engineering from dying out by subsidizing them. When oil prices began to fall, this affected exports and also lowered the yield of subsidized industries,” says the expert.
According to him, as long as there are cash payments and physical payments in gold in the national currencies of Iran, India and even Afghanistan, there will be no complete control by the Russian Federation over the imposition of sanctions restrictions. “They will always look for how to get around the loopholes. They just need sanctions packages that are impossible or difficult to circumvent, for which they need to concern oil, gas and other large-scale components of the Russian economy.” You can see how effective it is to limit the price of oil even if they bypass the sanctions, the difference between BRENT and URALS prices is huge. But Europeans should consider taking more responsibility to help Russia circumvent sanctions.“, – says Vitaly Shapran.
Expert suggested If oil prices remain low for a long time, it will seriously affect the economy of the aggressor.
“The Russian economy could die without devaluation by the long-term low oil price. But if the price of oil stays at $40-50 per barrel for a long time, then the ruble won’t last long either. But the devaluation of the ruble is more of an example – an external manifestation of what is going on inside their economy and an inflationary factor rather than a fundamental pressure on the Russians.
According to him, the Russian Federation had a certain margin of safety, and although the West froze part of its reserves, the aggressor country survived due to high oil and gas prices.
“Now the sanctions have reached the price of oil. We don’t need new sanctions against Russia, but we do need OPEC’s support to help keep the world oil price to a minimum, then Russian oil will be cheaper and this is almost the only economic factor in their economy’s collapse. Low oil price means low resource and tax payments and no subsidies for sanctioned industries,” explained Vitaly Shapran.
Previously Focus He wrote that the USA imposed additional sanctions on the aggressor state. From March 10, 200% customs duty is imposed on aluminum and aluminum products imported from Russia, and also tariffs on imports of mineral and chemical products from the Russian Federation to the United States are increased.
As reported, the war in Ukraine will continue to devastate the Russian economy and will lose $190 billion in 2026.
Source: Focus
Bridger is a political journalist at 24 News Breaker, covering the Politics section with over 5 years of experience. Known for their detail-oriented reporting, Bridger delivers insightful and engaging analysis on political issues.