By imposing secondary sanctions unless the Russia universal tariff is paid, the United States would be taking a cut of the revenues, effectively increasing the discount on Russian oil. Russia’s continued exports, despite facing large discounts over the past three years, suggest it would continue exporting the same volume. That would keep global oil supply stable and help keep oil prices in check. Oil and gas in Russia are inexpensive to produce, and it relies heavily on the income they generate, so it has little option but to keep selling, even at lower prices.

 

How to Punish Russia, Make Money and End the War

By Glenn Hubbard and Catherine Wolfram

Dr. Hubbard, a former chairman of the Council of Economic Advisers, is a professor at Columbia University. Dr. Wolfram, a former deputy assistant secretary for climate and energy in the Treasury Department, is a professor at M.I.T.’s Sloan School of Management.