Rising energy prices are expected to increase the energy earnings of Russia by 38 % compared to the last year, even though the Russian economy received a merciless beating by chronic sanctions of the western nations after its Ukraine invasion.
According to the documents of the Ministry of Economy of Russia, the energy exports of the country will touch $337.5 billion in 2022, which will help Russia not only in funding its Ukraine war but also to avert the negative consequences of western sanctions.
However, the boost in the energy sector earnings will only compensate for some negative impacts of the sanctions. This is due to the fact that not all the sectors are facing the same type of economic disaster due to the western sanctions. Some industries, particularly automobiles, were completely shattered by the sanctions, while the oil economy maintained its balance.
Other sectors worst impacted by the western sanctions include the IT and banking sectors of the country.
The economy ministry further indicated that the energy earnings of Russia will drop to $255.8 billion next year, which will still be greater than the 2021 earnings before the start of the Ukraine war.
How Western Sanctions Helped Russia in Making Big Money in Oil Exports?
Western nations led by the United States imposed chronic sanctions against Russia in the wake of its aggressive assault on Ukraine. While the western alliance believed that sanctions against Russia would destroy the Russian economy, the oil imbalance created as the result of the sanctions helped Russia rejuvenate its economy.
When Russia invaded Ukraine, one route of petrol supply was dismantled. Furthermore, Russia denied supplying petrol to some European nations for their refusal to make payments in Russian Rubles instead of dollars.
Resultantly, the global petrol market faced an imbalance, and despite a rise in demand, existing facilities were unable to provide enough energy to the consumers.
Eventually, Moscow started seeking new buyers that were ready to buy Russian oil. Under the sanctions, Russia managed to increase its oil production during a time period when not many countries were purchasing oil from it. Once Russia found new buyers, it started selling its oil in great numbers, which accumulated Vladimir Putin big money.
Russian state-owned energy giant, Gazprom, has now indicated that it will increase the oil supply to China, which will help in increasing the profit to a great extent.
Previously, some economists argued that the Russian economy would fall by 12 % in the wake of western sanctions, but the increase in petrol output helped the country in denouncing these types of pessimistic assertions.
Now, the GDP of Russia is only expected to decline by 4.2 % this year.