Russian Oil in the Era of Smart Sanctions

With the rise of “smart sanctions” in international politics, the energy sector has unsurprisingly emerged central to dealing with countries dependent on hydrocarbons. Most recently Russia has appeared at the centre of such sanctions. Energy, oil in particular, has been crucial for Russia’s rising economic fortune since Putin’s rise to presidency in 2000. Revenues from oil have contributed to a considerable economic growth, helped to sustain a ballooning military expenditure, and advanced Russia’s posture in its neighbourhood. This paper analyses the impact of these “smart sanctions” on Russia’s energy sector. It argues that the impact will be principally in the longer-run, while the immediate effect could be expected to be modest. The study analyses structural problems pertaining to Russia's oil sector that magnify or limit the impact of sanctions. It provides comparisons with other cases relating to smart sanctions affecting a country's energy sector. It also looks at the policies adopted by the Russian government in response to the sanctions and examines their implications on the oil sector. Additionally, it aims to present valuable questions for further research on smart sanctions.