不可更新資源的價(jià)格上限理論 A Theory of Price Caps on Non－Renewable Resources

NBERWORKINGPAPERSERIES

ATHEORYOFPRICECAPSONNON-RENEWABLERESOURCES

SimonJohnson

LukaszRachel

CatherineWolfram

WorkingPaper31347

/papers/w31347

NATIONALBUREAUOFECONOMICRESEARCH

1050MassachusettsAvenue

Cambridge,MA02138

June2023

WethankBenMoll,Jose-VictorRios-Rull,andseminarparticipantsatUCLandOhioStateforcomments.TheviewsexpressedhereinarethoseoftheauthorsanddonotnecessarilyreflecttheviewsoftheNationalBureauofEconomicResearch.

NBERworkingpapersarecirculatedfordiscussionandcommentpurposes.Theyhavenotbeenpeer-reviewedorbeensubjecttothereviewbytheNBERBoardofDirectorsthataccompaniesofficialNBERpublications.

?2023bySimonJohnson,LukaszRachel,andCatherineWolfram.Allrightsreserved.Shortsectionsoftext,nottoexceedtwoparagraphs,maybequotedwithoutexplicitpermissionprovidedthatfullcredit,including?notice,isgiventothesource.

ATheoryofPriceCapsonNon-RenewableResources

SimonJohnson,LukaszRachel,andCatherineWolfram

NBERWorkingPaperNo.31347

June2023

JELNo.F51,L13,L71,Q41

ABSTRACT

InDecember2022,followingRussia’sinvasionofUkraine,aG7-ledcoalitionofcountriesimposeda$60perbarrelpricecaponthesalesofRussianoilthatusewesternservices.Thispaperprovidesatheoreticalandquantitativeanalysisofthisnewtool.Webuildatractableequilibriummodelinwhichthefinanciallyconstrainedexporterofanon-renewableresourceoptimallyexertsmarketpower,andthepriceoftheresourcevariesstochastically.Animportantinsightfromthisframeworkisthatthesupplycurveisinelasticandcanevenbedownwardsloping,rationalizingthepatternsweobserveinthedata.Contrarytothefearsthatanintroductionofthepricecapwillcauseadamagingoilsupplyshock,theexportermayhavestrongincentivestoincreaseextractionfollowingtheintroductionofabindingpricecap.Infact,whentheproducerislargeandhasmarketpower,apricecapthatappliestoallormostsalessignificantlylimitsthedegreetowhichmarketpowerisusedinequilibriumandstabilizesworldoilprices.Butifthecapispoorlyenforced,orifthesanctionedstatehasaccesstoanon-compliant“shadow”fleet,thecapislesseffectiveatstabilizingworldprices.

SimonJohnson

MITSloanSchoolofManagement

100MainStreet,E52-562

Cambridge,MA02142

andNBER

sjohnson@

LukaszRachel

UniversityCollegeLondon

30GordonStreet

London,WC1H0AX

UnitedKingdom

andCentreforMacroeconomics

l.rachel@ucl.ac.uk

CatherineWolfram

HaasSchoolofBusiness

UniversityofCalifornia,Berkeley

Berkeley,CA94720-1900

andNBER

wolfram@

2

1Introduction

OnDecember5,2022,thePriceCapCoalition,consistingoftheG7,theEuropeanUnion(EU),andAustralia,respondedtothecontinuingRussianinvasionofUkrainebyimposingacaponthepriceofseaborneRussianoilsoldintoglobalmarkets.CompaniesbasedincoalitioncountriesarecurrentlyallowedtoprovideservicesthatsupportRussianoilsales,includingshipping,insuranceandtradefinance,butonlyifthepricepaidtoRussiadoesnotexceed$60perbarrel.TheCoalition’sgoalistoreduceRussianrevenuefromoilsales,

whilealsoensuringtheuninterruptedflowofRussianoiltoglobalmarkets,hencepreventinganegativesupplyshockthatcouldhaveadverseshort-termconsequencesfortherestoftheworld.

1

TheimplementationofthispricecaponRussianoilisasignificantdevelopmentintherealmofinternationaleconomicpolicy.Itrepresentsanovelapproachtosanctionsinaneraofglobalizationwhensomemarketsaredominatedbyfewlargeautocraticproducers.Rus-

siaisoneofthetopthreeoilproducers,everydayexportingabout12%ofthedailyglobalsupplyofcrudeoilandoilproductscombined.Givenitsimportancetoglobalmarkets,conventionalapproachestosanctioningoilproducers,suchasoutrightbansorembargoes,wouldhavehadmajorimpactsonworldpricesand,byextension,theglobaleconomy.Ifthepricecapproveseffective,nocountryistoolargetoescapetheconsequencesofsanc-tionsimposedbyasufficientlydeterminedallianceoffinancialandshipping-relatedserviceproviders.Dependingonitssuccess,thepricecaponRussianoilcouldbecomeablueprintforfuturesanctions,aswellasinternationaleconomicandtradepolicymoregenerally.

However,todatetherehasbeenlittleformaleconomicanalysisofhowthepolicymightimpactboththesanctionedcountryandtheglobaloilmarket.Someofthepublicdiscourse

onthepricecapappliesoutdatedlogicbasedonpreviousoutrightembargoesandsuggeststhatanyoilshipmentsoutofRussiaareaviolationofsanctions.Mostofthepolicydiscussioncontinuestofocusonstaticanalysis,suchaswhetherthepricecapshouldbesetclosetotheshort-orlong-runmarginalcostofproduction,raisingthequestionofwhetherthe

1ThepricepolicywasdevelopedinthecontextoftheEU’s“6thSanctionsPackage”,whichwasadoptedinearlyJune2022.ThesemeasuresincludedanembargoonthepurchaseofRussianoilfromDecember5,2022,alongwithabanonEUcountriesprovidingservicesinsupportofRussianoilexports.AsimilarbanonRussianoilproductswasslatedforFebruary5,2023.SincewesternserviceswereusedforalargeshareofRussianexports–over70%bymostaccountsinthecaseofRussianseabornecrudetrade(seeCraigKennedy,forthcoming)–therewereconcernsthatthisEUpolicypackagecouldkeeplargevolumes

ofRussiancrudeandproductoutofthemarket,effectivelysqueezingglobalsupplyandsharplyraisingoilpriceseverywhere.ThepricecapmechanismwasdesignedtomaintainthesupplyofRussianoiltoworld

marketswhilesqueezingRussiangovernmentrevenueandsustainingtheEUembargo.

3

sameintuitionappliesinadynamicsetting.Furthermore,policymakersandanalystslackaquantitativeframeworkthatwouldhelpinformchoices,suchaswhethertomaintainthe

original$60perbarrellimitoncrudeorlowerthepricecap.Discussionsofimplementationandenforcementprioritiescanalsobenefitfromthesimpleyetrobustframeworkproposedinthispaper.Inparticular,ourframeworkemphasizestheimportanceofpreventing–ordelayingasmuchaspossible–thedevelopmentofashadowfleetthatdoesnotoperateoutoftheG7-ledcoalitioncountries.

Ourdynamicmodelfeaturesastateexporterofanon-renewableresourcewhodecidesonanextractionpath–i.e.acanonicalcake-eatingproblem,inthespiritof

Hotelling

(

1931

).

2

Theproducerlives,tosomedegree,hand-to-mouth.Ourmainmotivationforthisisthepotentialpresenceoffinancialfrictions,suchasborrowingconstraints,aswellasfrictionsandrisks(totheexportingcountry)associatedwithaccumulatingfinancialassets.

3

Theon-shorestoragecapacityofRussiaisalsoquitelimited.

4

Section

3

buildsintuitionusingtheillustrativecaseofperfectforesight,butourmainmodelfeaturesapriceofoilthatisstochastic.Fluctuationsoftheworldoilpricereflectacomplexpatternofdemand,supply,andsentiment(expectation)shocks.Inourmodel,theoilpricefollowsadiffusionprocesswhichweestimate,thatcapturestheempiricallyrelevantmomentsoftheoilpriceseries.

5

Thefinalkeyelementofourframeworkisthattheproducerhasmarketpower.Thisisrealisticinthecurrentcontext,giventhatRussiaisoneofthetheworld’sleadingoil

producers,oilpricesspikedimmediatelyafterthe2022invasionbegan,andaprincipalrationaleforimplementingthepricecappolicywasthatacompleteEUembargo–refusingtobuyRussianoilandeffectivelyblockingsalestothirdcountries–couldleadtoacontractioninworldoilsupplyandaspikeinworldpricesofoil.Wedevelopatractableapproach

2Throughoutthispaper,weusetheterms“exporter”,“producer”and“Russia”interchangeably,giventhecontext.Wealsorefertothecommodityinquestionasoil.Butouranalysisisgeneralandappliestoanyentitythatextractsacommodityovertime.

3Thesefrictionsaredriven,inpart,byboththe(ex-ante)anticipatedpossibilityoffuturesanctionsandbytheimpositionofsanctions.Russiahassubstantialofficialforeignreserves,butthesewere“frozen”bytheG7immediatelyaftertheFebruary2022RussianinvasionofUkraine.Sincethatinitialfreeze,Russiahasbeenallowedtoselloil,andsomeothercommodities,accumulatingforeignassetsinGazprombankandother“private”entities.Russianauthoritiesmaybeconcernedaboutpotentialfuturefreezesofthoseassets.

4Oilcanalsobestored“onthesea”.Butthisinvolvesloadingoilthathasnotyetbeensold,andshippingcostsareincurreduntilsaleanddelivery.

5WhileOPECPlus,theoriginalOrganizationofPetroleumExportingCountries(OPEC)plusRussiaandseveralsmallercountries,influencesworldpricesbysettingproductionquotas,inpracticetheoilpricevariesagreatdeal.Attheendof2021,thepriceoftheBrentbenchmarkwasaround$75perbarrel,risingcloseto$90inJanuary2021,andjumpingsharplyaftertheinvasion.Afterpeakingabove$120perbarrelinearlyJune2022,theoilpricefellduringtherestofthatyear.

4

thatintegratesthemarketpoweroftheproducerwithastochasticprocessforthepriceofoil.Theproducer’smarketpowerisendogenoussinceitdependsonthemarketshare

oftheproducer,whichevolvesovertime,dependingonextractiondecisions.WhilewedonotmodelthestrategicinteractionbetweenRussiaandotherglobalproducers,ourmodelfeaturesparametersthatreflecttheresponsivenessofotherproducers,suchasOPEC,toshocksoriginatingfromRussiaorelsewhere.

Thisapproachoffersfourmainfindings.First,theproducer’ssupplycurveisinelasticand,forplausibleparameters,maybedownwardsloping–i.e.,itmaybeoptimaltoincreaseproductionwhenfacedwithalowerpriceofoil.Weviewthisfindingasconsistentwiththe

evidenceofanegativecorrelationbetweenthepriceofoilandRussianextractionthatwe

presentinSection

2

,andwiththeobservationthatRussianproductionhaschangedlittlein thefaceoflargefluctuationsintheoilpriceoverthepastfewyears.Thisdownwardslopecomesfromtwodistincteffects:a“wantcashnow”effectanda“smoothing”effect.The“wantcashnow”effectcapturesthedegreetowhichtheoilproducerusesoilrevenuesto financecurrentconsumption.Itariseseveninasettingwithnouncertainty,whenthepriceofoilisknownandfixedforever.Withrealistic(non-homothetic)preferencesthatreflecte.g.thefactthattheproducerhasothersourceoffundsbeyondoilsales,whenthepriceofoilislow,theproducerismorewillingtosubstituteoilrevenueflowsacrossperiods–becomesmoreinter-temporallyelastic–whichmakesitbehaveasifitweremoreimpatient.

Thusmoreoftheresourcesareextractedtoday,increasingsupply.The“smoothingeffect”operateswhenthepriceofoilfluctuates.Ahighpricetodaymeansthatthemarginalutilityofrevenuestodayislowandisexpectedtoincrease;thus,theproducercutsproductiontoday,effectivelysavingfortoughertimesaheadwhenthepriceisexpectedtobelower.

Whenpricesarelowandthemarginalutilityishigh,theproducersmoothsrevenuesbyextractingmore,effectivelyusinguptheimplicitsavingsthatithadaccumulatedinthegoodtimes.

6

Second,a“perfect”pricecap–apolicythatappliestoallornearlyalloftheproducer’sexportsales–tendstoincreasetheproducer’soilexports.

7

Thisisanimportantandperhaps

6Whenpricesarestochasticthereisalsoa“optionvalue”effect:whenpricesarelow,theproducercutsproduction,savingtheoilinthegroundtobesoldonlywhenpricesriseinthefuture.Thiseffectcausesthesupplycurvetobeupwardsloping,but,aswediscussindetailbelow,isdominantonlyatpricesthatarejustabovethemarginalcostofproduction.

7Throughoutthepaperwetreatthepricecapasaonce-and-for-allpolicy.Thatis,weabstractfromanyeffectsthatcomefromtheanticipationthatthelevelofthecapwillbeadjustedinthefuture,oranyprobabilitythatthecapmightbeliftedaltogether.Suchanalysisisbeyondthescopeofthispaperbutshouldbepursuedinfutureresearch.

5

surprisingfindingthatrunscountertothepopularnotionthattheproducer’sincentivestoextractarediminishedwhenpricesarecapped.Theimpactonproductionisaneteffectoftwoforces.First,abindingpricecapbringsdownthesaleprice,andthusinducesamovementalongadownwardslopingsupplycurve.The“wantcashnow”andthe“smoothing”effectscreateeconomicincentivestoincreaseextraction.Second,abindingpricecapremovestheupsideshockstofuturerevenuesthattheproducerwouldotherwisebenefitfrominexpectation.Thusthecapmakestheproducerpoorer,diminishingitsabilitytosmoothrevenues(smoothingiseffectivelyanormalgood).Lesssmoothingshiftsthesupplycurveinwardsandtotheleft.Weshowthat,ifthepricecapissufficientlybinding–i.e.ifitissetsignificantlybelowtheongoingworldprice–themovementdownthesupplycurvedominatestheinwardshift,andtheneteffectisthatthepaceofextractiongoesup.

Third,inthepresenceofmarketpower,implementingabinding,“perfect”pricecapsignificantlydiminishestheincentivestoexercisemarketpowerinequilibrium.Thelogicbehindthisissimple:whenthepricecapisbinding,curbingsupplyleadstolowervolumesbutunalteredprices,therebyrenderingtheuseofmarketpowerineffective.Thisfindinghasimportantimplicationsfortheimpactofthepricecap.Mostnotably,abindingpricecapcanactuallydrivedownworldoilpricesandactasastabilizeroftheglobaloilmarket.Suchpositiveeffectsofapricecaparestrongerthegreateristhedegreeofmarketpoweroftheproducer.Thisisbecausethecaperadicatestheuseofmarketpowerinequilibrium,sothegreatertheinfluenceofmarketpowerattheoutset,themoresignificantthefavorableimpactofacap.Overall,ourstudydemonstratesthatapricecapcanbeapotenttoolandsuggeststhatitsbenefitsmightactuallybegreaterifitisappliedtotheexportsofaproducerwithsignificantpowerinamarketforagivencommodity.

Ourfourthfindingconcernstheeffectsofanimperfectpricecap,i.e.,acapthatappliestoonlyashareofacountry’ssalesofacommodity.Thisanalysisisimportantbecausemonitoringandenforcementofanycapislikelytobeimperfectandthesanctioningcoalition(e.g.,ofbuyers)islikelytobeabletoimpactonlyacertainpartofexporter’ssales.

8

Ourfindingsshowthatifworldpricesarehigh,sothatsufficientrevenuescanbegeneratedthroughsalesoutsideofthepricecapregime,theproducermayhavestrongincentivesto“shut-in”productionandinsteadsellthereducedquantitiesonlyoutsideofthepricecapregime.Theincentivestoshut-inproductionaregreaterwhenthepricecapislower,sothatthethresholdfortheworldpriceabovewhichtheproducershutsinproduction

8Forexample,expertestimatesandmarketintelligencesuggestthat,asofMarch2023,westerninsuranceandtransportservicesareusedinaround70%ofRussianoilsales.

6

fallswiththecap.Thus,withanimperfectcap,theincentivestoexercisemarketpower

remain.Thiseliminatesthepowerfulstabilizingeffectsthatexistwhenthecapisperfect.However,oursimulationsalsosuggestthatshuttinginproductioncanbecostlyintermsofcontemporaneousrevenue,andtheimpactonworldpricesismanageable.InthecurrentcontexttheexerciseemphasizestheparamounteconomicimportanceofpreventingRussiafrombuildingupalargeshadowfleet,aswellastheneedforeffectiveenforcementofthepricecap.

Literatureandcontribution.Thepricecapisanewandlivepolicyandthereislittle

directliteratureonthistopic,whichmotivatesthisproject.Earlyanalysisoftheeconomicsofthepricecapappearsin

Wolframetal.

(

2022

)andin

Johnsonetal.

(

2023

)(forthcoming).Inarecentpaperthatcomplementsourswiththeempiricalanalysisofthecap,

Babinaet

al.

(

2023

)usecustomsdatatoprovideevidenceontheeffectivenessofthecapimposedby

theG7onRussia.Theyfindthatsanctionshaveledtoafragmentationoftheoilmarket,

withtheoilthatwasdestinedtoEuropetradingatsteepdiscountsandbelowthecap,whiletheoilsoldelsewheretradingatclosetoglobalprices.Theyconcludethatalowerlevelofthepricecapcoupledwitheffectiveenforcementiswarranted,andouranalysislendsfurther

supporttothisrecommendation.Inarelatedtheoreticalcontribution,

Salant

(

2023

)studiestheeffectsofpre-announcingthepricecap.

Theframeworkweemployintheanalysisbuildsontheclassicworkby

Hotelling

(

1931

),butappendsitwiththestochasticpriceofoilasstudiedinthefinanceliterature(see

Coxet

.

al(

1985

),

LongstaffandSchwartz

(

1992

),

ChenandScott

(

1993

),

DuffieandKan

(

1996

)formodelsofinterestrates,and

SchwartzandSmith

(

2000

)and

Pindyck

(

1999

)formodelsofcommodityprices)anddevelopsatractablewaytothinkaboutmarketpower.TheHotellingframeworkhasbeenstudiedandextendedinnumerousstudies.

9

Anotablecontributionisthatof

Andersonetal.

(

2018

)whostudytheroleofcapacityconstraintsanddrillingdecisions–bothmarginswhichweabstractfrom–andanearlierworkby

Salant

(

1976

)whostudiestheextractionprobleminaframeworkwithrealisticindustrialorganizationstructureoftheworldmarket.Ourpaperanalyzestheimpactofthepricecapontheextractiondecisionsandworldoilprices,stoppingshortofanalyzingthegeneralequilibriumimpactontheglobaleconomy.Acomplementarypaperby

Bornsteinetal.

(

2023

)developsaquantitativegeneral

9Classicreferencesinclude

Solow

(

1974

),

Stiglitz

(

1976

),

DasguptaandHeal

(

1974

),

Pindyck

(

1980

),

ArrowandChang

(

1982

).Foranoverviewofworkinthe50yearsafterthepublicationofHotelling’sarticle,see

DevarajanandFisher

(

1981

).Recentworkincludes

vanderPloegandWithagen

(

2012

),

Newelland

Prest

(

2017

),

Salant

(

2012

)and

Gaudet

(

2013

).

7

equilibriummacroeconomicmodelwithoilproductionsector,andusesittostudytheadventoffracking.

Thispapermakestwomaincontributions.First,itprovidesadynamicframeworkforanalysisoftheeconomicsofthepricecappolicywithpricesthatvarystochastically,anddemonstrateshowtoincorporatemarketpowerconsiderationsintosuchframework.Second,

itappliesthemodeltostudytheeconomicincentivesofRussia,andthepolicyoptionsofthePriceCapCoalition,inthecurrentcontext,thusexplicitlyaddressingoneofthetimelyandpressingpolicyquestions.

Finally,itisusefultohighlightwhatwearenotdoinginthispaper.Thedecisiontogotowariseconomicallycostlyandnaturallyincreasesthepressureonthestatebudget,raisingthemarginalvalueoffundstoday,relativetothefuture.ThispresentsanadditionalincentiveforRussiatoincreaseextractionatgivenprices–astraightforwardwayofcapturingthisinamodelwouldbetoraisethediscountrateoftheproducer,makingitmoreimpatient.Weabstractfromthisimportanteffectinouranalysisinordertofocusonhowthepricecappolicyitselfaffectstheproducer’sincentives.

Structure.Therestofthepaperisstructuredasfollows.Section

2

describesRussia’soilsector,includingitscosts,thepricesitfacesandtypicalexportvolumesandroutes,andprovidessomeinstitutionalcontextonthepricecapthatisrelevanttoourmodel.Section

3

introducesourmainassumptionsinasettingwithnouncertainty.Section

4

addsthestochasticprocessforthereferencepriceofoil.Section

5

studiestheeffectsofthepricecapinapartialequilibriumsetting.InSection

6

weconstructourequilibriummodelwithmarketpower,andstudytheeffectsofthepricecaponthedegreeofmarketpowerexercisedinequilibrium.Section

7

considersthecasewheretheproducercanpartiallybypassthepricecap.Finally,Section

8

concludeswithadiscussionofpolicyimplications.

2Thefacts

2.1Russianextractionhistorically

Russiahasalong-establishedoilsectorandinthe1970swastheworld’slargestoilproducer.WiththefalloftheSovietregime,oilproductiondroppedtoaslowas6millionbarrelsofoilperday.However,investmentinthemid-1990s,alongwithaccesstowesternoilfield

services,helpedtorestoreproductiontomorethan10millionsbarrelsperdayin2019,makingRussiathethirdlargestoilproducerinthetheworld(aftertheUSandSaudi

8

Extraction(millionb/d)

Annual

12.0

10.0

8.0

6.06.0

20102020

Source:OPEC;CEIC

2022

Source:USEIA

Monthly

2000

2018

2019

2020

2021

1970

1980

1990

12.0

10.0

8.0

Figure1:Russia’soilextractionhistorically:annual,1970-2020(leftpanel)andmonthly,January2018-December2022(rightpanel)

Arabia).Inrecentyears,mostRussianproductionhasbeenexported(7.5-8millionbarrelsperday,outofproductionof10-10.5millionbarrelsperday),makingRussiatheworld’stopexporterofcombinedcrudeoilandproduct.TheleftpanelofFigure

1

plotsannualRussianoilproductionsince1970andtherightpanelplotsmonthlyproductioninthelast5years,highlightingthemajordisruptionsaroundthepandemicandthewar.

2.2Russianoilproductionandexportmarketspriortothewar

In2021,Russiaexported7.5millionbarrelsofoilperday,ofwhichcrudewas4.7million

barrelsandrefinedproductswere2.8millionbarrels.Asinglebarrelofcrudeoilcanbeprocessedtoproducemultiplerefinedproductssuchasgasoline,diesel,jetfuel,andotherderivativesofoil.Refineriescanbedesignedtoproducedifferentmixesofrefinedproducts,althoughthescopetochangethisislimited,especiallyintheshortrun.Asof2021,Russia’srefiningindustryhadthecapacitytoservedomesticgasolinedemandandthecountryex-portedtheremainingproducts.Substitutingbetweenexportingcrudeandexportingrefinedproductsispossibletosomedegree,buttheinfrastructurediffersandtherearepipelineandportconstraintsoneach.

MostRussianoilisproducedinWesternSiberiaandtransportedbypipelinetorefineriesandshippingfacilitiesinRussia’sWesternports.Beforethewar,Russia’slargestoilcustomer

9

Volume(millionbarrelsperday)

4.0

3.0

2.0

1.0

0.0

Destination

Unknown

"Fororders"

Others

India

Turkey

China

SouthKorea

US+UK

EU

Feb2022Apr2022Jun2022Aug2022Oct2022Dec2022Feb2023Apr2023

Source:CREA

Figure2:Russia’sseabornecrudeoilexportsbydestination,January2022-April2023.DashedlineindicatesthestartofthepricecappolicyforcrudeoilonDecember5,2022.

wastheEuropeanUnion,whichreceived0.7millionbarrelsofcrudeoilperdaybypipelineand1.5millionbarrelsbyseain2021.TheEUalsobought1.2millionbarrelsofoilproduct,almostallofwhicharrivedbysea.Overall,theEUimportedabouthalfofRussia’stotal

exports.MostofthetankerscarryingthesefossilfuelstotheEUdepartedfromthreesetsofports:intheBlackSea,theBalticSea,andMurmanskinthefarnorth.

Chinawasalsoanimportantcustomer,primarilysuppliedfromRussianportsinthefarEast.In2021,Chinareceived1.6millionbarrelsofcrudeperday,halfbypipelineandhalfbysea.ChinadidnotpreviouslybuyasignificantquantityofRussia’srefinedproduct.

Figure

2

plotsRussia’sseabornecrudeoilexportsbydestinationsinceJanuary2022.Itdoesnotreflecttheapproximately1.5millionbarrelsofcrudeoilperdayexportedviapipeline,roughlyhalfofwhichusedtogototheEUandhalftoChina.Figure

3

plotsRussia’soilproductexportsbydestinationsinceJanuary2022,almostallofwhichtravelsbyship.

Russia’sabilitytoshiftsupplyacrosscustomersfacesseveralconstraints.First,crudeoil