Working Group Paper #14 Using Energy Sanctions to Shorten the War
21 September 2023
The Impact of Energy Sanctions We estimate the lost oil revenues as a result of the deeper discount on Russian oil – underpinned by sanctions, including embargoes and the G7 oil price cap – with the discount on the main Russian benchmark (Urals) to the Brent benchmark widening from a negligible $1-2/bbl quality differential before the invasion to an average of $29/bbl discount since the invasion. [...] According to the IEA, by early August, Russian gas, oil, and diesel were trading above the premium product price cap of $100/bbl and Russian fuel oil and naptha were trading above the discount product price cap of $45/bbl.1 Russia does not have enough shadow tanker capacity to transport this much crude and oil product in circumvention of the price cap regime. [...] We call for the EU to set a timetable to end the direct supply of Russian gas to the European market. [...] Tightening Energy Sanctions To Shorten the War Further energy sanctions are justified to squeeze Russia’s energy revenues, weaken the economy and budget, and thereby constrain Russia and accelerate the end of the war. [...] We also propose to impose personal sanctions on the senior officials and managers of the sanctioned companies, reflecting their enhanced level of responsibility – as the leadership of the critical industry which underpins the Russian economy and budget – for the actions of the Russian state and therefore for the invasion of Ukraine.