Given a chance to take their toll, new oil sanctions should accelerate the Russian energy sector's steep decline, intensify Moscow’s cashflow squeeze, and strengthen the West’s negotiating hand.
The $200B+ defense lending pool is essentially shadow banking at state scale. Suspending credit risk assessments creates opacity that's impossible to unwind once defaults start cascading. I've seen similar dynamics in smaller markets where politically-mandated lending bypassed fundamentals, always ends badly. The parallel between treating energy/banking as extractable capital reserves vs sustainable systems feels like acritical blind spot for Moscow.
How long, do you think, can Russia sustain this? And what happens when the bottom falls out from under the Russian economy? Will the Russian economy 'collapse,' or will it 'fizzle'?
The timing of this analysis could not be more ironic. Three weeks after these tightened sanctions were supposed to squeeze Russian seaborne flows, OFAC issued GL 134 — a one-month blanket waiver for Russian crude already loaded on tankers — precisely because Hormuz blew up the supply math. Kennedy's revenue estimates assume enforcement discipline that Washington just abandoned under price pressure. The sanctions architecture works beautifully on paper. In a $110 Brent world with 8 mbpd offline from the Gulf, the paper burns fast. What happens to the compliance infrastructure — designated vessels, P&I exclusions, port state enforcement — once buyers know a crisis waiver is one CNBC headline away?
The $200B+ defense lending pool is essentially shadow banking at state scale. Suspending credit risk assessments creates opacity that's impossible to unwind once defaults start cascading. I've seen similar dynamics in smaller markets where politically-mandated lending bypassed fundamentals, always ends badly. The parallel between treating energy/banking as extractable capital reserves vs sustainable systems feels like acritical blind spot for Moscow.
How long, do you think, can Russia sustain this? And what happens when the bottom falls out from under the Russian economy? Will the Russian economy 'collapse,' or will it 'fizzle'?
The timing of this analysis could not be more ironic. Three weeks after these tightened sanctions were supposed to squeeze Russian seaborne flows, OFAC issued GL 134 — a one-month blanket waiver for Russian crude already loaded on tankers — precisely because Hormuz blew up the supply math. Kennedy's revenue estimates assume enforcement discipline that Washington just abandoned under price pressure. The sanctions architecture works beautifully on paper. In a $110 Brent world with 8 mbpd offline from the Gulf, the paper burns fast. What happens to the compliance infrastructure — designated vessels, P&I exclusions, port state enforcement — once buyers know a crisis waiver is one CNBC headline away?