RACHEL MARTIN, HOST:
There have been so many different kinds of sanctions imposed on Russia, on the elites there, banks, technology. So far, though, sanctions have steered clear of Russian oil. But as Sarah Gonzalez with our Planet Money podcast reports, some companies are imposing their own sanctions anyway.
SARAH GONZALEZ, BYLINE: The U.S. has been reassuring banks and insurance companies and shipping companies and any brokers that work with oil that they can keep doing oil business with Russia, that they would not be violating sanctions.
RACHEL ZIEMBA: The Treasury Department actually reiterated that.
GONZALEZ: Rachel Ziemba is a fellow at the Center for a New American Security. Her focus is on oil-exporting countries and coercive economic policies, so sanctions. And she says the U.S. made these special exceptions for oil because hitting oil would be horrible for the world. Russia is one of the world's biggest oil exporters. So no one wanted to mess with that. But then oil started getting hit in another way.
ZIEMBA: We are seeing this buyer's strike, what in the marketplace we've been calling self-sanctioning - this reluctance to take on Russian barrels of oil.
GONZALEZ: Big oil companies, like BP, Exxon, they started self-sanctioning on their own, ending their relationships with Russia. A whole bunch of oil buyers have stopped buying Russian oil.
ZIEMBA: We're now at a point where several million barrels a day of Russian oil are not being purchased. And that's pretty unique.
GONZALEZ: OK. Oil is usually sold at auctions. And Ziemba says normally, you'd have utilities and refineries bidding at these auctions for Russian oil. But millions of barrels of Russian oil up for auction, likely intended for European buyers, haven't gotten any bids.
ZIEMBA: Russian oil ready to go through the pipeline that European buyers aren't purchasing.
GONZALEZ: So now Russia is cutting its oil prices, like, come on, who wants this oil for cheap? Ziemba says Russian oil is selling for about $20 less a barrel than all the other oil of the world. Someone's going to buy that oil eventually.
ZIEMBA: Someone will. Someone will.
GONZALEZ: Yeah. India bought some, and China. And, Ziemba says, the rest of the world probably won't be able to hold out for that long. There's just a lot of demand for oil. And so it will remain a big source of income for Russia. Russia makes hundreds of billions of dollars a year in energy exports, which is a pretty good cushion when it's under so much economic pressure.
ZIEMBA: Russia could survive with some of these revenues for a long period of time. I mean, we've seen other countries, such as Iran and even Venezuela, hold out for quite a long time on sanctions.
GONZALEZ: And those countries have less oil revenues coming in. But getting by on energy money alone is not going to be easy.
ZIEMBA: The Russian economy would shrink. And it would be a much lower level of development and consumption. And so they could survive. But it wouldn't look pretty.
GONZALEZ: The average Russian will feel the effects most.
For NPR News, I'm Sarah Gonzalez.
(SOUNDBITE OF DRE DILLA'S "UBUD SUN") Transcript provided by NPR, Copyright NPR.
