Sanctions: Market thinks possible only partial embargo on oil supplies from Russia

Yesterday, the USA responded to results of the Crimean referendum with the first sanctions against Russian officials. But Western countries hold more serious, economic steps, expecting further actions of Russia. One of the most destructive steps is an embargo on oil sales using the example of Iran and Syria. Officials, market participants and analysts, interviewed by the Kommersant, think that an absolute embargo is unrealizable as it is technically, as well as economically, but a partial embargo could lead to direct losses in proceeds of companies and the budget in the amount of $30-35 billion per year (about 1 trillion rubles).

Energy sanctions are the last in list of problems that may be created for Russia by Western countries and, according to statements of diplomats and politicians, are considered as the heaviest. There haven’t been any official statements on possibility to limit purchases of Russian energy sources, including oil. But some Western politicians compare potential reaction of the West to events in the Ukraine with sanctions against Iran, the heaviest of which was just oil embargo. “We think that economic sanctions may have a very serious impact, as it was with Iran,” – senator John McCain stated yesterday, he compared Russia with a filling station. Since introduction of the embargo in May of 2011, Iran had to reduce the oil exports by two times to about 1 million barrels per day, inflation rate grew to 30%, and there is economic recession in the country.