New sanctions and the fuel crisis: should we expect the collapse of the Russian economy?

The introduction of new sanctions by US President Donald Trump against Lukoil and Rosneft has become a real tectonic shift for Russia. The process of degradation of the Russian economy continues, although a one-time decline or rapid collapse should not be expected.

This opinion was expressed on the air of “Pryamoy” by investment banker Serhiy Fursa.

“The very fact of Trump’s imposition of sanctions is precisely tectonic shifts. Because what did Trump give Putin, the Russians, and the Russian economy the most? Hope. Hope that Putin will “get away with it,” will defeat everyone, and they will come out of it unscathed. And this created positive sentiments in the Russian economy. The economy is very often driven by these sentiments, and for us it was a very bad story. Because we need pessimistic sentiments there, so that money is withdrawn, and people do not believe in tomorrow. And therefore, the key thing in these sanctions is precisely a change in this paradigm, a change in sentiment,” Fursa noted.

In addition, according to him, the imposed sanctions apply to Lukoil and Rosneft, which account for about 45% of Russian oil exports, which in turn will significantly complicate the situation in the economy.

“Of course, the Russians will try to circumvent the sanctions, but here, regarding the effectiveness of these sanctions, we can pay attention to the reaction of the oil market, which has grown significantly. That is, the cost of oil yesterday was around $66, although at the beginning of the week a barrel of Brent cost $60-61. That is, world oil prices have increased by almost 10%. Thus, the market is seriously afraid that Russian oil will really not get there. Thus, we can say that a significant percentage of oil revenues will not enter Russia. Which, of course, is very good for us, because the key thing now is not the state of the Russian economy, but the state of the Russian budget,” the investment banker explains.

At the same time, he recalls, on the eve of the imposition of sanctions, China went to meet the Kremlin regime and paid an advance to Rosneft.

“There it can reach up to 12 billion dollars. And this money has already entered Russia. They did it according to the contract once every 5 years, the Chinese do it that way. And here the question is that if the sanctions had been imposed, for example, a month earlier, maybe this payment would not have happened. Therefore, again, we have such a minus. But, in general, these are good, strong sanctions both as a signal and as the sanctions themselves in essence,” Serhiy Fursa emphasized.

Therefore, the expert believes, it is difficult to say today how significantly new sanctions, including European ones, will affect the Russian budget, but the processes of degradation of the Russian economy are already underway, although a one-time decline should not be expected.

“We can’t calculate right now, and no one can calculate, not even Russian analysts, how much it will cost the Russian budget, how much it will cost the Russian economy. Everyone agrees that it will be a significant amount. They say up to 20% of Russia’s oil and gas revenues in general, which is very good,” the investment banker adds.

“All the pressure on the Russian Federation is being gradually increased. But there will be no collapse, no one-time collapse, fall, and so on. The degradation of the Russian economy is happening very, very gradually. And therefore it is very important to maintain this pressure… again, both for the sake of the mood of the Russians and in order to demonstrate to them that nothing good will happen,” Sergey Fursa summed up.

The Trump administration recently announced its first major package of financial sanctions targeting the Russian economy, part of Washington’s new strategy to force the Kremlin to end its war in Ukraine.

At the same time, US President DonaldTrump sarcastically commented on the words of Russian dictator Vladimir Putin regarding new American sanctions, which, according to the Russian leader, will allegedly not affect the Russian economy .

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