Russian state TV host taunts Europe over high gas and oil prices
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Western nations were horrified after Russia’s bloody invasion of Ukraine almost six months ago and placed unprecedented sanctions on Putin’s regime. However, the Rouble – following a relatively short crash – is now the strongest performing currency in the world. The Russian economy has taken a hit, but so has the world economy. Energy, specifically natural gas, has become Putin’s unconventional weapon of choice against Europe, and the effects of turning off the taps have been relatively one-sided.
Energy expert from Keele University, Dr Samir Dani, told Express.co.uk Russia has been making a profit on its oil and gas since the war began, despite reducing sales to Europe.
Moscow has cut supplies to Europe, sparking fears of a crisis there over the winter months but the increased energy prices mean that sales to China and India to make up for the loss.
Dr Dani said: “From my perspective, they have reduced gas supply to Europe, but their gas supply – gas and oil – to China and India has been pretty steady.
“There are lots of other players in the market, which are trading energy to other parts of the world, not Europe.”
In fact, due to spiralling energy costs – around three times the wholesale costs before the war – Russia is making a profit selling its energy elsewhere.
Part of the reason for the spike in energy prices could be the Western sanctions themselves, according to Dr Dani.
He added: “At the moment, Russia is getting three times the price for supply so they are not making a loss at all, they’re actually making profit.
“[The effects on] the world economic market by sanctions have actually increased the worth of their gas supply.”
Russian oil exports sank 13 percent from May to June 2022, however the profits made from the sales actually increased slightly over that same period and were higher than for the same period in 2021.
It’s unlikely, according to Dr Dani, that in the short term Russia will be overly affected by sanctions as long as it can sell some of its gas to a reliant Europe and continue to sell oil and gas at a high price to other buyers in Asia.
While this continues, the world economy suffers and energy prices will likely continue to rise.
Dr Dani said: “Now, if the West finds a complete solution, to not rely on Russia in the future, then of course, [Russia] will be hit hard, but I think that’s the long game.
“That’s not a short game. Short game is that we are going to suffer in the West, very, very starkly at the moment with this energy [crisis].”
Western leaders have claimed that sanctions against Russia are working, however.
US Secretary of State Anthony Blinken told reporters that Russia was “cherry-picking economic data” to show the strength of its economy.
He said: “Economically, the sanctions we’ve imposed on Russia to end its aggression are having a powerful and also growing effect.
“Now, Moscow has been cherry-picking economic data to support President Putin’s insistence that everything is fine and the Russian economy is going strong. It’s simply not true.”
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There is no denying that the sanctions hurt Moscow. However, Russia has been sanctioned – less harshly – since it invaded Crimea in 2014. Its energy focused economy continues to carry on despite pressure from Western sanctions.
Other areas of the Russian economy may be faltering, however. The US claims Russia has lost 50 percent of its imports since the invasion of Ukraine – particularly high-end components from the West.
Additionally, Russia is running a budget deficit and half of its foreign currency reserves are frozen overseas.
It is likely a waiting game as to who will baulk first, Russia or the West. With Europe heading into winter with a looming energy shortage, Putin may think that he can out-wait Europe when it comes to the energy war.
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