Hacker News Reader

In your rather long post, you did not mention the fact that Russia refuses to sell oil to any country which applies the price cap. I wonder, is this really not relevant for your analysis?

It doesn't help Russia. The end result is the same: A smaller pool of customers and an anchored price for the remaining customers.

In fact, Russia had to reduce their output because they refuse to sell it to countries that participate in the price cap and there isn't enough demand otherwise (also most of their flow goes west through the now mostly idle pipelines to Europe - It's MUCH harder to move oil east or south because the infrastructure in that direction isn't big enough to handle such a surge). So Russia's losing even MORE profits by refusing to sell to them. AND they still have to maintain the now idle pipelines to the West or else they'll break down over time and become useless.

That's just factually wrong I'm afraid https://www.cnn.com/2023/04/14/energy/russia-oil-exports-iea...

"That's just factually wrong I'm afraid"

This kind of response is incredibly rude.

So it looks like their production has since gone up, a lot (after dropping mid last year). Profits are still down because nobody's paying full price.

https://www.euronews.com/2023/05/31/russian-oil-exports-are-...

I'm not sure what's rude about stating that the statement you made is factually wrong. Furthermore, the west doesn't really have good data on the volume of sales Russia is doing because these transactions are happening outside of SWIFT.

> https://edition.cnn.com/2023/04/14/energy/russia-oil-exports...

>> The revenue is still down 43% from a year ago, the IEA said, as Russia is forced to sell its barrels to a more limited pool of customers who can negotiate greater discounts.

>> Still, sanctions have made a significant dent in Russia’s coffers. Last week, the government said declining energy revenues had contributed to a budget deficit of 2.4 trillion rubles ($29 billion) in the first three months of this year. Its overall income plunged nearly 21% compared with the same period in 2022, Reuters reported.

So is this article a lie or not? its your own source, you seem to want to very selectively quote it.

Caveat there is that the numbers are based on what US can observe through SWIFT trade, but Russia does most of its trade now in local currencies. So these numbers claiming revenue is down 43% aren't actually showing the whole picture. However, as the article admits, even that is still pretty significant.

> Caveat there is that the numbers are based on what US can observe through SWIFT trade, but Russia does most of its trade now in local currencies. So these numbers claiming revenue is down 43% aren't actually showing the whole picture. However, as the article admits, even that is still pretty significant.

No it's not, the budget deficit information comes from Russia itself.

You're making a conjecture between two separate things. The statement regarding revenue being down 43% is not related to the deficit statement from Russia.

It's all a part of the same picture. Details and figures may vary a little based on which periods are used for reference, but the overall story remains the same. As of April, according to RU FinMin, income from oil&gas is down -52% YoY, expenditure up +26%, deficit at 30%. In a departure from the usual dry and humorless style of official press releases, they describe outlook as positive.

And even these figures are artificially pumped by factors like the previously mentioned "trade in local currencies". India pays for oil in rupees, which are piling up in Indian banks because there is no use for them. Russia has no comparable demand for Indian goods, can't exhange rupees for other currencies, can't pay to third countries in rupees, and is unwilling to invest that money in India. Oil flows to India, nothing comes back.

If this is how Russia "successfully skirts western sanctions", then may it continue for a long time.

I guess we'll just have to wait and see what happens won't we. Seems to me that the economic problems that Europe is seeing right now are far worse than ones in Russia. So, if things continue the way they are European economy can't last a long time.

> I guess we'll just have to wait and see what happens won't we. Seems to me that the economic problems that Europe is seeing right now are far worse than ones in Russia. So, if things continue the way they are European economy can't last a long time.

The Russians have a deficit of over 40 billion dollars, it doesn't look super rosy.

Additionally they are losing a lot of people in the war and having countries cancel military equipment orders.

Wait till you find out the deficit that US currently has.

It was $1400 billion for the year 2022

> This means that Russia can't sell at full price because even those not enforcing the cap aren't willing to pay full price for it

India and China have been paying well above the price cap: https://www.reuters.com/business/energy/india-china-snap-up-...

They pay more than the price cap, but less than the market rate (because they don't have to pay market rate now that Russia doesn't have much choice of customers - supply and demand).

And that's really the whole point. We'd prefer for China and India to support the price cap because that would even further reduce Russia's customer base (and by extension the price that they can actually sell at). But even as things stand, Russia is losing profits hand over fist.

> This means that Russia can't sell at full price because even those not enforcing the cap aren't willing to pay full price for it (why should they, when Russia's choices of customers are severely limited?)

Yeah, as if energy sources are fashion material and are being bought out of pure fun and leisure. Because countries can just allow themselves not to rely on energy.

Your explanation of the situation sounds like the Byzantine corporate structures that multinationals use to evade taxes. I assume the goal is the same - to hoodwink and exploit the populace.

Morally speaking, I’d expect to have zero imports of Russian fuel to declare “independence”.

The goal is to keep the gas supply relatively stable, while reducing Russia's share of the profits. It's a kind of price-fixing-in-reverse.

And you don't need zero imports to declare independence. You just need them low enough that Russia will gain no political leverage over you by threatening to shut down the supply to your region.

We have different definitions of "independence".