The embargo for show

Since December 2022, the sixth EU sanctions are entered into force, which, in particular, involves the so -called oil embargo in relation to Russia - the ban on export in the EU, the ban on EU companies to finance and insure Russian oil transportation. This set of measures will have a lot of negative consequences for the Russian oil industry - from discounts to the price to logistics problems. However, the question remains discussion to what extent these prohibitions can reduce the revenue or profit of Russian oil industry workers, namely the physical volume of Russian oil exports.

We will consider this issue not from the usual point of view whether the West has tools in order to prevent Russian oil to redirect the third countries. In conditions when most of the Russian oil is exported by sea, and China alone is able to buy the entire Russian export of oil one and a half times, the dispute about the availability of such instruments, in fact, boils down to the dispute about how much the West is able to force Chinese and Indian companies to refuse Russian oil purchases.

In my opinion, a more significant question is whether the declared goal is to reduce the physical volume of Russian oil exports by the real task of Western sanctions on the horizon of the next two to three years. I will express such a seditious thought: if European politicians really allowed for a second the possibility that their embargo could significantly reduce the physical export of Russian oil, they would not introduce it, as in relation to gas. And if Putin said tomorrow that he himself “for technical reasons” stops export of all Russian oil, then they would instantly enter into negotiations that Putin did not do this, as it is now regarding gas.

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In early March, when everyone shouted: "Stop buying a bloody gas!" -I warned that in the future of one or two years, gas exports are not so much a lever of the EU pressure in Putin as a Putin lever on the EU. Now the same people are announcing “outrageous gas blackmail”, not seeing any contradictions in their position. It is clear that in a three-five-year-old EU will learn to live without Russian gas, and Russia will lose gas exports irrevocably. However, for the next couple of years, the balance of losses is reverse. And with oil, everything is exactly the same.

The world energy balance is one. It is one thing - the situation when the Russian Federation has stopped exporting to the EU, increasing exports to third countries, and the Gulf countries, on the contrary, reduced exports to China or India and increased to the EU. In this case, the amount of oil in the world market has not changed. Russia suffers losses in discounts, and the world economy suffers minimally. A completely different situation if Putin stops the supply of Russian oil at all tomorrow.

Let's fantasize about the consequences of such a development of events.

Three crises and one disaster

Today, Russia mines about 10 MBD (millions of barrels per day), which is just over 10 % of the global oil production. It exports a little more than 7.5 MBD of the oil equivalent (if in addition to raw oil, it is considered and exported oil products). These are more than 7.5 % of world consumption and about 17 % of world exports (most of oil is consumed in the production of countries themselves, for example, in the USA and China, less than 45 MBD is circulated in the international market).

To evaluate whether it is a lot or a little, reasonable to consider what happened with the proposal of oil during previous oil crises and how the world economy reacted to this.

The world oil production over the past half century has declined three times: during the oil crisis of 1973-1975 by 4.5 %, between 1979 and 1983 by 15 %and in the 2020 pandemia - by 10 %. Both for reasons and by consequences, these were different decreased.

The crisis of 1973-1975, when the Arab countries decided to punish the Western world for the support of Israel, was remembered by the world of hippie picnics on empty autobahns, prohibits to drive in cars less than three people, coupons and bursts at gas stations, a change in the growth rate of GDP of developed countries with stable positive and inflation to several times. All this was provoked by a fall in volumes only 4.5 % at the peak, and if you take the average values ​​of world production for three years from the beginning of the crisis, it simply did not grow for three years.

The decline in prey in the early 1980s, when Saudi Arabia three times reduced production to retain prices, it took place for the world economy relatively painlessly. The fact is that by that time, the developed countries frightened by the 1973 oil shock have already actively reduced their energy dependence in all possible directions - from a massive transition to minor to the forced development of atomic energy. At the same time, strategic oil reserves in the event of future interruptions with deliveries began to be created around the world. In particular, the strategic supply of US oil was accumulated from scratch to current levels of about 500 million barrels between 1977 and 1985. Similar reserves were created in other countries, not only by the state, but also by private structures. As a result, the drop in oil production of the early 1980s, in fact, occurred to the levels of its current consumption.

If suddenly Putin really decides to add oil to the gas blackmail, it is very likely that different Islamic terrorists, rebels and lovers of Salisberet spiers will begin to blow up pipelines more often than usual

A similar situation was in the pandemine of 2020, when, due to the elbows, stopping production, flights and transportation, consumption fell stronger than prey. Accordingly, a reduction in oil reduction could not be provided with a serious additional influence on the economy.

Today we have a completely different alignment: at the exit from the pandemic, the growth of oil does not have time for the growth of consumption, oil reserves are reduced for the past year and a half, and world investments in oil production and at all for eight years in a row. Therefore, if you model the scenario of the real departure of Russian oil exports from the world market, we must focus on 1973, when 4.5 % at the peak, not 7.5 % forever, left the oil market.

Let me also remind you that, with the exception of the periods of the crises described, in general, oil consumption in the world is growing steadily (as well as energy resources throughout the history of mankind). Now this growth is due to developing countries. For example, over the past 15 years, China has more than doubled consumption, becoming a world oil importer number one, and India increased it more than one and a half times, becoming a world importer number two.

The growing middle class in developing countries buys its first machines and increases the consumption of petrochemical products - building materials, clothing, cosmetics, etc. All kinds of stories about green energy, hydrogen and electric cars - this is about rich countries, whose share in oil consumption is already decreasing for 30 years. The demand is not in the demand of those consumers who invest hundreds of billions in new energy. EU efforts to reduce energy consumption will not affect the growth of demand in Africa or in Southeast Asia.

A sharp decrease in oil supply on a global scale will necessarily lead to an increase in prices and, accordingly, to a deep structural crisis. And this crisis will hit primarily on the industrial economies of developing countries. There will be pure water in 1973.

There is no one to replace Russia

Now let's try to analyze the possibilities of filling Russian oil exports in the next couple of years. The vast majority of oil manufacturers today produce within the limits of existing capacities. There are few exceptions, we list the main ones.

Traditionally, Saudi Arabia had a rapid increase in extraction. But in many ways this was a thing of the past due to a long -term decrease in investment in the industry and refusing to develop new deposits in the development of old ones. Today, Saudi Arabia mines about 10.5 MBD. A couple of months ago, the management of Saudi Aramco (which produces Saudi oil) announced the “ambitious” plans to bring the production to 12.3 MBD in 2025 and 13 MBD in 2027. I believe this is a technological limit for increasing production (he is a historical maximum). It is clear that in the long run, Saudi Arabia, which has large volumes of relatively easily produced oil, can increase production much more, but this will require the development of new deposits. Thus, the maximum that may appear here is 1.8 MBD for three years and 2.5 MBD in five years.

Another country that can significantly increase prey in theory is Venezuela. She mined 3.5 MBD in 1998 and less than 1 MBD in recent years. But the Oil infrastructure of Venezuela is in a catastrophic state, the deposits themselves are characterized by much more complex production conditions than in the bay, while the properties of most of the Venezuelan oil are such that its processing requires specially tuned oil refineries, mixing with other varieties, etc. Even if we assume that tomorrow the Maduro regime will be replaced by the supplied one The Americans are a reasonable government, which will quickly settle many years of disputes with foreign oil companies and countless creditors once expelled from the country, will give concessions back to foreigners, and will also return the non-and-unfortunate engineers who have fled from the country, will need long years to restore the destroyed and significantly increase prey. I will leave here a fantastic assumption that they could add 1 MBD in two years, but I myself do not believe in it.

The third possible source is Iran, which not so long ago mined 4.6 MBD versus 3.3 MBD now. I admit that with the political will of the West, the indicated 1.3 MBD can return to the nuclear transaction relatively quickly, but everything is not so simple here. Unlike Venezuela, the oil industry of Iran suffered not so much from mismanagement as from the technological sanctions of the West. Many infrastructure elements also degraded for decades. If we talk not about the return of the recently lost, but about the long -term increase in production, then it is hardly possible without the arrival of Western oil companies, which is extremely unlikely with the current political regime. But 1.3 MBD in two years is much more realistic than 1 MBD from Venezuela.

The United Arab Emirates , one of the few OPEC countries that steadily chooses its quota of prey, has a power reserve. We evaluate this reserve at 1 MBD.

The last resource of additional oil production is the so -called unconventional sources - from shale oil to Canadian bitumen sands. Over 10 years of shale boom in 2010–2020, the extraction of unconventional oil in the United States has increased from less than 1 MBD to more than 8 MBD. That is, in conditions of super -high oil prices and record investments in the industry, growth was about 0.7 MBD per year in the USA and less than 1 MBD per year in the world. It is growing at about the same pace even now. According to the forecast of the American authorities, in 2023, production in the United States will grow by 0.84 MBD mainly due to shale oil. Theoretically, a sharp increase in oil prices can stimulate a faster increase in extraction from non -combin sources, however, there are many technological restrictions like the number of affordable drilling rigs, etc. If oil prices will be more than $ 200 per barrel, it can be assumed that by 2027–2028, unconventional oil sources fully compensate Russian exports. However, at such oil prices, a reduction in demand due to large investments in energy conservation and alternative energy should be expected more likely. Which, on the one hand, sounds good, and on the other means a full -scale structural crisis of the global economy.

There are no other significant reserves of the rapid growth of production.

If you add the numbers, it turns out that on the horizon of two years - in an ideal situation - we have an unattainable maximum of 6.5 MBD versus 7.5 MBD of Russian exports.

At the same time, we forgot that if the world economy is growing at least minimally, then the demand for oil usually grows, at least by 1 MBD per year, that is, for 2 MBD in two years. And we forgot the oil regions, where recently, production has inevitably decreases due to the exhaustion of stocks or political instability, as in the North Sea or Nigeria. Even at high oil prices, in general, in such regions, reduction will still continue, even by 0.5 MBD in two years per circle. In total , another 2.5 MBD will fall in two years.

In general, whatever one may say, whatever reserves, it is obvious, it is obvious that on the horizon of two years, in order for the world to escape serious energy shock, it is necessary to maintain Russian exports at least 4–5 MBD of the oil equivalent. But this is utopia. In reality, even the loss of a quarter of Russian oil exports will be extremely sensitive.

And there is still the next level. If suddenly Putin really decides to add oil to the gas blackmail, it is very likely that various Islamic terrorists, rebels and lovers of Salisberet spiers will begin to blow up pipelines in the most inappropriate places more often and arrange the attacks of drones on the nephe -chemical complexes costing many billions of dollars. And there is also an export of Kazakhstan at 1.7 MBD, which mostly goes through Russian territory, and then along the list. And all this in parallel with the already begun gas crisis.

The embargo for show

It is clear that in a few years the world economy will be rebuilt and will do without Russian oil. And due to energy conservation, and due to the growth of production in different places around the world. But the same thing is clear about gas, which does not interfere with gas blackmail. For people who love to rattle nuclear weapons, there should be a “zapadlo” to think about economic prospects on a five -year horizon, if they have the opportunity to cause unacceptable damage to the enemy for two years.

Of course, I do not believe that Putin will really decide to blackmail the world with an oil crisis. The costs are disproportionate. If the Russian economy will live without gas exports, then without an oil reserve of strength, it will be enough for the same couple of years during which the world economy adapts to loss. However, I also did not believe at the beginning of a full -scale war with Ukraine and was wrong.

However, I wrote this text not about an unlikely threat of oil blackmail from Russia. And about the fact that conversations about the embargo in the sense of a significant decrease in the physical volumes of Russian oil export are nothing more than PR for European voters. Even if the West really had tools for such a restriction, no one would do this in their right mind, which is well illustrated by the gas theme.

This does not mean, of course, that European sanctions do not affect the Russian oil sphere, economics and budget. Discounts caused by sanctions to the price of Russian oil reduce export revenue by 20-30 %. The costs of logistics have grown, and technological restrictions on the import of equipment undermine the long -term prospects of the Russian oil industry.

However, a sharp decrease in the physical volumes of Russian oil exports from next year is associated with disproportionate damage to the entire world economy, and therefore such a goal was never in reality.