Russian President Vladimir Putin on Tuesday signed a decree banning the sale of oil to countries participating in the Western-imposed price cap on Russian crude that was pushed by the US and its G7 partners.
Putin’s ban will take effect on February 1 and last through July 1, 2023. It’s not yet clear what impact his retaliation will have on the global market, as many Western countries that favor the cap have already stopped importing Russian oil.
But Russian officials still expect Russia’s oil production to be reduced somewhat in 2023. According to Bloomberg, Russian Deputy Prime Minister Alexander Novak said Russia’s oil output may fall by 500,000 – 700,000 barrels per day in early 2023.
Last month, Russia averaged 10.9 million BPD, the highest level in eight months, as Western sanctions have failed to curtail Russian energy profits.
The decree signed by Putin said that it applies to “supply contracts that directly or indirectly use the mechanism of setting a price cap.” The EU set the cap at $60 per barrel, and Western insurance companies are banned from providing insurance for shipments of Russian oil that exceed that price.
The US, Britain, and most EU countries have all banned the import of Russian oil. Some landlocked EU countries that rely on Russian oil shipped through pipelines have exemptions, including Hungary and Slovakia, but the price cap only applies to seaborne oil.
Japan is still importing some Russian oil and is participating in the cap, but Tokyo has an exemption for crude sourced from the Sakhalin-2 plant, an oil and gas project in eastern Russia that Japanese energy companies are involved with.
Nothing to go to war over…
The war is ongoing in Ukraine.
Yes Don, but I think Donna is talking about a direct war with Russia. The one the US is trying to avoid by using Ukraine as a sacrificial lamb in the “ongoing” one.
Only in Ukraine? How would I live to have your innocence. For those that took red pill long time ago, there is no way back.
EU and American politicians continue to let their citizens suffer through terrible inflation just so they “look tough” on Russia and prolong bloodshed.
Oil and gas prices are falling so the terrible inflation which started before the SMO and much before the sanctions is not caused by them, it was temporarily have been made worse by them, but with the introduction of the oil price cap there is little to suggest that lifting the sanctions and throwing the Ukrainians under the bus will curb inflation – the incoming recession will do that much more efficiently.
I am afraid you are right.
My understanding of his comment was less that inflation was oil supply chain caused, and more that inflation is caused by deficit spending, a large portion of which is military spending. I.E. washington isn’t honest enough about their budget to admit we can’t afford this war, and americans don’t want the taxes it would take to finance it, hence deficit spending and inflation.
If that was what he meant to imply, he would also be very wrong, inflation has hit most (all?) western economies and they hit as part of the post covid recovery – in many (most) of the nations it hit, there were no additional military spending when it started – so inflation was not caused by military spending and in most places deficit spending was also being rolled back – so also not because of that*. Perhaps more importantly we are moving into what could very well be a global recession.
The point is that the US cannot afford not to not support Ukraine in this war. The reason being that Washington (and many military analysts) believe that not supporting Ukraine, very likely leads to China taking Taiwan back (the seat of 80% of computer chip production).
More importantly not supporting Ukraine, likely could lead to a failure to keep up the sanctions, if that is the case then there is a near certainty that China will take back Taiwan (if we cant resist the Russians we have no hope of resisting the much more powerful Chinese) and in the chaos that would follow a Chinese conquest of Taiwan more nations in the world would be likely to try their own versions of the SMO.
In short the chaos of failure to support Ukraine, is likely to cost the US (and all other nations) so much as to make the cost of supplying Ukraine look like pocket change.
* though in all cases inflation might have been smaller had deficit spending been cut faster and military spending curb.
It seems you very much misunderstand inflation, what it is, and it’s causes. There is only ever one cause of inflation and that is the money printers.
Now, there might not be a tight correlation between money printing and a rise in the CPI, but this is not to say that the inflation didn’t happen. This is to say that the inflation didn’t happen in the areas measured by the CPI.
It’s a well known economic fact (the cantillon effect), that changes in the money supply do not correlate with a perfectly proportional change in the price of things. Somethings go up sooner, somethings even go down initially!
So really, you shouldn’t expect the monetary inflation to be a result of the deficit spending of the past month or even the past year. This problems in our economy may only now be coming home to roost but they’ve been in the making for years!
Nor does it surprise me at all that the major countries in the world are all experiencing inflation when all the major countries have been pursuing the same monetary policy!
as to whether Russia’s invasion of Ukraine is some sort of prelude to more ominous things in Taiwan… if this is the case, which I doubt, it is a case of Washington’s own making!
How many conflicts the world over does the US claim to support a certain side, but fail to do anything about? Why didn’t china invade Taiwan after they saw trump “fail to stand by our Kurdish allies”? Why didn’t they invade Taiwan after the horrendous withdrawal from Afghanistan?
If China thinks that Ukraine is somehow more core to american interests, and that retreat in Ukraine is indicative of american weakness, more so than any other examples of the rare american forbearance, then it is only so because Washington has spent so much wasted blood and money and propaganda convincing the world that a border dispute between Ukraine and Russia is quintessential to the american dream somehow.
The reality of the situation is, the more we waste time and resources and ammo in Ukraine, the less we have to defend Taiwan. A show of force just as you empty your arsenal is not so convincing as a full arsenal. If we really wanted to convince china to leave taiwan alone, then we’d pull all our equipment out of Ukraine, and all our troops and equipment out of the middle east and station them around the island. Now that’s a real deterrent.
This whole idea that Ukraine is presage to taiwan is ridiculous and laughable propaganda to make Americans invested more in Ukraine, which has no american interests whatsoever except a few sweet deals for a sweaty crack head related to a certain politician.
Inflation is an increase in the money supply relative to goods and services available for purchase.
During the pandemic, the money supply increased dramatically, while GDP (production of goods and services) fell. But a lot of DEMAND fell as well, and there were shortages unrelated to price due to shutdowns, so the effects of the inflation weren’t immediately felt in pricing. It was when things began to open back up that all that newly created money started flooding into markets as consumer demand, creating what is called “price inflation,” which is an effect of inflation, not inflation itself.
Sure during the pandemic there were special circumstances – but explain why we experienced very little inflation between 2009 and 2019. The problem here is that conventional wisdom would have us experiencing a lot of inflation we did not, and only after the pandemic did we experience it, but at that time it was very likely driven by:
– saved up means
– cut in supplies from supply chain distortions
– cuts in Chinese production owing to still having covid restrictions
– labor supply problems
In Europe we had loads of cases of people cutting back on labor supply (having saved up means?) and loads of late cut back of government programs for testing (soaking up a lot of labor).
The likely conclusion is that the current inflation is not likely to be just on account of deficit spending nor is it likely that it will continue even if we continue to deficit spend – as it is already falling in many places and we are approaching a recession. Biden made things a bit worse for the US by continuing some programs AFAIK, but it is very much a near global phenomenon and could very well respond poorly to normal interventions.
“Sure during the pandemic there were special circumstances – but explain why we experienced very little inflation between 2009 and 2019”
Look at GDP from 2009 to 2019.
Then look at money supply from 2009 to 2019.
They track fairly closely. There’s not a gigantic differential between GDP increase and money supply increase — and such a differential is the very definition of inflation.
Additionally, the chart I found for money supply was M2, which includes not only cash in circulation but temporary Fed deposits in banks, which did not express as increased demand.
In 2020-21, there was a massive increase in money supply at the same time GDP took a dive. Then we came out of the pandemic with a crap ton of new money, but production of goods and offerings of services not increasing by nearly as much. The differential is called “inflation.”
At some level you have to admire the programming these guys have gone under, Goebbels would be proud. I don’t know if it’s funny or sad that such a basic logical concept of massive sudden increases in the monetary supply combined with even looser monetary policy having even just some negative (from our perspective) impact on prices is considered outlandish.
“Oh yeah, what about X? What about this emperical model I totally made up and defined the parameters?”
With no way to pay for their wars and foolish policies, Empires keep debasing their currency to find a few more dollars, until people realize it’s not worth anything anymore and Empire’s hubris and lack of funds ends up creating it’s own downfall
The point is that money printing does not generate inflation in and by itself – otherwise the quantitative easing introduced following the financial crisis would have generated significant inflation – it did not.
Yep, they should’ve let Russia completely annihilate Ukraine and annex the entire country. That would’ve solved all the bloodshed and Putin would’ve been happy planning his next invasion.
You obviously have no idea as to what you are talking about , do some research i suggest you start with the 33 countries invaded by the Americans since 1953 to the present day , you may just learn something altho i doubt it.
Our resident trolls maintain that the USA deserves mulligans every time we invade and/or topple governments that don’t meet our
demandsdemocratic standards.Russia? apparently such a powerful threat they’re ready to just invade all of Europe, but also so incredibly weak and pathetic america can take them out without any need to worry repercussions. That Russia, right?
Delusional.
“Paper tiger” one day, scourge of the world the next.
“We’re putting a price cap, effective now against all the countries which already aren’t buying russian oil, and with exemptions for all the countries that need to continue importing russian oil”
Supremacy of US dollar* is shrinking (but not going away). Russia now buys Chinese Yuan when Ruble reserves surpass 8 trillion Rubles. The Economist I watched believes it is Eurooean currencies that will lose status the most.
*because of it’s weaponization