Originally published on Forbes.com on April 28, 2022

Russia is actually moving the EU in the right direction – to ban more oil imports from Russia, which could be huge leverage in stopping the tragic war in Ukraine.

President Zelensky has been calling for a ban of oil and gas imported from Russia. Many in the West have supported this. The US announced a ban on Russian oil a few weeks ago, but the amount of oil was very small, and didn’t really affect Russia.

Zelensky’s call was based on huge revenues that Russia gets from exporting oil and gas. Russia gets roughly 74% of its export revenue from its oil exports (crude oil plus petroleum liquids). But it only gets about 10% of its export revenue from natural gas.

The amount of revenue that Russia receives from exporting oil and gas to the EU is about $1 billion per day. Some have called this blood money. For comparison, EU countries, including Germany and Poland, paid $6 billion in January for their natural gas which amounts to only $0.2 billion per day.

So for the West wanting to stop the Russian war, a huge step is to stop importing oil and gas from Russia…  but oil is the key.

Russia’s ban on gas to Poland.

On April 27, Russia announced it would stop exporting natural gas to Poland and Bulgaria – ostensibly because these countries wouldn’t pay for the oil in roubles, the Russian currency.

In 2020, Poland Imported almost 10 billion cubic meters (Bcm) from Russia, representing 2-3% of all Russian gas exports. Banning such a small amount won’t hurt Russia, because their gas export revenues are only about 10% of their total export revenues.

But it won’t hurt Poland much either, because natural gas is only 18% of their energy supply and some of this comes from Qatar in the form of liquefied natural gas (LNG).

It’s more of an aggressive fear tactic designed to unsettle the West. Unfortunately, the West hesitate to be overtly aggressive themselves, by refusing to provide Poland’s MIG-29 fighter jets to Ukraine or to start banning Russian oil instead of just talking about it.   

Banning Russia’s oil.

If the West banned all they could of Russian gas, it would reduce Russia’s export revenue by 69% of 10% of their gas export revenue — which amounts to roughly 7%.

But if the West banned all they could of Russian oil (crude plus petroleum liquids), it would reduce Russia’s export revenue by 45-50% (see Figure 1) of 74% of their oil export revenue – which amounts to roughly 35%.

The economic impact on Russia’s revenues if the West banned their oil (a 35% hit) versus banning their natural gas (a 7% hit) is vastly different.

Figure 1. Export value of crude oil from Russia. Source: Statista

So while the West complains that Russia is blackmailing Poland and Bulgaria, Russia is actually moving the EU in the right direction – to ban more oil imports from Russia, which could be huge leverage in stopping this tragic war.