Despite High Oil Prices, Russia Now Faces a Situation Even Worse than the USSR Did Before Its End, Kazakh Portal Says

Paul Goble

            Staunton, April 1 – Many assume that the high prices for oil in the wake of the war in Iran are automatically translating into equivalent boosts in the income of the Russian government, the Altyn-Orda portal says; but in fact, Russia faces a situation in that regard even worse than the one the USSR did before its demise.

            That is because while it has oil to sell, it faces new challenges in selling it and thus is earning less money from it than one might think, the Kazakh portal says. Indeed, it continues, Moscow is having ever more problems in converting its oil into money (altyn-orda.kz/kogda-neft-nekuda-devat-rossiya-vhodit-v-stsenarij-huzhe-chem-u-sssr-pered-raspadom/).

            Ukrainian drone strike on the Ust-Luga port, pressure on Primorsk, and the risks of using Novorossiysk have created a situation “in which several key export channels simultaneously find themselves under attack,” Altyn-Orda says. Indeed, these are “no longer isolated incients.” Instead, the Russian system is “beginning to suffocate.”

            Those problems ae compounded by others. “Oil-loading facilities are operating at capacity; logistics networks are overburdened; shipping routes are lengthing; insurance costs are rising, and risks are mounting.” Consequently, while “the oil is there, it is becoming ever more difficult to sell.”

            “When oil cannot be moved to market, production must be curtailed, a direct blow to the national budget” despite high prices because “the entire economic model rests upon a simple formula: extract, then sell, then earn foreign currency. If this chain breaks at any point, the entire structure collapses.”

            Because that is the case, Altyn-Orda says, “that is precisely why we are no longer dealing merely with ‘temporary difficulties.’ For the first time, Russia is not confronted by an oil shortage but rather by an oil surplus without a stable market. And that,” the portal continues, “is far more dangerous.”

            As a result, “comparisons with the Soviet Union no longer seem as far-fetched.” At the end of the USSR, Moscow “was hemorrhaging money; but at that time, its infrastructure was not under direct attack.” Today, it is. That represents “a new type of pressure,” a kind that won’t  produce a sudden collapse “but rather a gradual deprivation of the system’s oxygen.”

            As of now, “the system is still functioning,” Altyn-Orda says; “but it has already begun to suffocate, a state of affairs which as history demonstrates, rarely endures for very long.”