COLUMN-Recession would make tough oil sanctions on Russia more likely: Kemp
By John Kemp
LONDON, July 14 (Reuters) - Recession in the major economies is the only sure-fire way to reduce Russias petroleum revenues an uncomfortable truth Western policymakers have tried to obfuscate from voters at home.
U.S. and EU policymakers will not deliberately plunge their economies into a recession simply to intensify the economic pressure on Russia; privation is not an attractive option in electoral politics.
But if their economies go into recession anyway, which currently appears possible or even probable, the likelihood of tough sanctions on Russias oil exports will increase significantly later this year and in 2023.
Russia was the worlds second-largest oil producer in 2021, with output of 536 million tonnes, behind the United States with output of 711 million tonnes, but just ahead of Saudi Arabia on 515 million tonnes.
On a mass-basis, Russia accounted for nearly 13% of worldwide production, behind the United States (17%) but marginally ahead of Saudi Arabia (12%), according to BP (Statistical review of world energy, July 2022).
Saudi Arabia, the other Gulf monarchies and U.S. shale firms appear to be producing close to their current limits, with few options to raise output in the short term.
None of these producers seems both able and willing to make up for any loss of crude and refined fuel exports from Russia, in any significant volume, despite the recent surge in prices.
In the absence of a recession, the marginal barrel in the oil market is therefore from Russia, and the terms on which it is made available to international buyers in the Middle East and Asia set the global price.
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