Tortoise's path: How sanctions on Russia's oil and gas revenues work

The first sanctions against Russia were imposed back in 2014. For the EU, this marked the beginning of a review of its foreign policy, as the 2008 Russian-Georgian war, which was condemned in resolutions and statements, did not lead to the imposition of restrictions.

From 2022, the restrictions significantly expanded, becoming more severe and aimed at causing harm to the aggressor. The EU has adopted 13 sanctions packages since February 2022 and extended their validity for another six months in January of this year.

Sanctions and export controls have been introduced by a coalition of more than 30 countries, accounting for 50% of the world's economy. Several states have not supported unilateral restrictions on Russia, including China, India, Iran, the UAE, Israel, and Saudi Arabia. Turkey, a NATO member, and Serbia, a candidate for EU membership, have also not joined.

The imposition of sanctions in 2022 can be divided into several stages. The first stage of restraint (November 2021 – February 20, 2022) saw diplomatic negotiations taking place.

The second stage began with Moscow's recognition of the independence of the self-proclaimed 'People's Republics' of Donetsk and Luhansk on February 21. The United States and the EU imposed several trade, financial, and individual restrictions on the same day. Sanctions were also announced by the United Kingdom (February 22), Australia (February 23), and Japan (February 24). Germany suspended the certification of Nord Stream 2 on February 22.

The third stage began on February 24.

Sanctions against Russia are aimed at achieving three goals:

• reducing revenue from the export of raw materials;
• undermining Russia's military potential and its ability to continue the war;
• causing significant damage to the Russian economy.

In the economic sphere, sanctions are aimed at Russia's payment channels (banks and the financial system), Russian reserves, and oil revenues.

Oil price cap

Sanctions on fossil fuels consist of two elements: an import ban and a price cap on sales.

A number of countries have imposed an embargo on the maritime import of Russian oil and certain petroleum products, with some exceptions. The EU adopted the first ban in June 2022.

A price cap of $60 per barrel of oil (about 159 liters) was set in December 2022 to reduce Moscow's revenues. This was supplemented by restrictions on petroleum products: $45 per barrel for discounted petroleum products and $100 per barrel for premium petroleum products. The Price Cap Coalition includes the G7 countries, Australia, the EU, with Norway and Switzerland also introducing restrictions.