Russia’s oil is failing to bail out its economy as China lacks the infrastructure to absorb more supplies and Europe mulls a formal ban

Not even Russia’s oil can save Russia’s economy from collapsing under the weight of international sanctions.

That’s because the US and UK have already blocked Russian oil; The European Union is considering a possible ban of its own, and China, for its part, may not have the capacity or infrastructure to absorb more of Vladimir Putin’s oil.

Russia’s attack on Ukraine last month triggered sweeping sanctions from the West, which have battered the Russian ruble and pushed the country to the brink of default. The country’s salvation may have been its oil production, but that hope is fading.

Since the beginning of the war, about 3 million barrels of oil per day, or 3% of world production, have been effectively removed from the world oil market. That supply shock, the biggest in decades, has pushed oil prices above $100 a barrel, according to a Tuesday report from the Federal Reserve Bank of Dallas, with some experts predicting even higher prices.

The Dallas Fed suggested that one way to fix the deficit would be for China to use heavily discounted oil from Russia instead of more expensive imports from other countries. However, this idea is “unlikely in the foreseeable future,” said the monetary authority.

“There is very limited spare capacity in oil pipelines connecting China to Russia and it is unclear where China would source the oil tankers needed to ship more oil to China and at what cost,” the Dallas Fed wrote.

For its part, the European Union is considering joining the US and UK in sanctioning Russian energy exports this week, though leaders remain divided on the matter.

Famed French commodities trader Pierre Andurand told Bloomberg News last week that many countries are avoiding Russian oil even without government sanctions. He said banks, including Chinese banks, do not want to finance Russian oil cargo in the face of Putin’s attack on Ukraine, and that Russia will soon have to shut down production if they run out of storage capacity. By the time the world can trust Russia again, the country’s oil is likely to be “gone forever”.

“We have to live with higher prices to keep demand down,” he told Bloomberg.