On Tuesday, The New York Times reported that the Russian oil industry — a core source of revenue for Vladimir Putin's regime — is facing grave jeopardy as Western nations and companies prepare to cut them off in retaliation for the invasion of Ukraine.
"The Russian oil industry ... is likely to experience a wrenching reworking about how it does business in the coming weeks, months and even years," reported Stanley Reed. "In the short term, this painful reckoning will come not so much because blue-chip oil companies are leaving, but because Russian oil and gas have suddenly become toxic to many buyers."
President Joe Biden and members of Congress in both parties are now eyeing a ban on Russian oil imports, and exploring imports of oil from other sanctioned petrostates like Venezuela and Iran to make up the shortfall. But the U.S. itself doesn't import much Russian oil — only about 3 percent of all oil imports, and 1 percent of the total oil in the country — and the European Union, which imports far more, doesn't appear sold on a ban yet for fear of soaring energy prices.
That may not matter, though, because according to the report, many Western oil companies that do business in Europe are pledging to stop buying Russian oil: "On Tuesday, in the latest sign that Russia’s energy industry was being abandoned by the West, Shell, Europe’s largest oil company, said it would stop buying the country’s oil and gas and 'withdraw from its involvement in all Russian hydrocarbons.'"
And the fallout from this could be a disaster for the regime, which relies on the oil industry as one of its biggest revenue streams.
"China, for instance, is a hard bargainer that pays only a fraction of the price for Russian natural gas that customers in rich European countries like Germany and Italy are now paying," said the report. And all this comes at a time when "the output of the vast West Siberian oil fields and other older operations that have sustained Russia as a world-leading oil producer for decades is in decline. New fields being developed by Russia around the Arctic are 'notable for their harsh operating conditions and higher costs,' according to a recent study by Energy Aspects, a research firm."