Matt Yglesias has an excellent post discussing the way that US energy policies often work at cross-purposes. The administration many wish to reduce energy exports from adversaries like Russia, Iran and Venezuela, but not so much as to hurt the global economy. The administration may also wish to limit new domestic energy production to address global warming, but not so much as to hurt the economy.

Yglesias points out that a possible win-win policy adjustment would ease domestic energy rules enough to boost production by X barrels per day, and simultaneously tighten sanctions enough to offset the US production increase.  It’s a clever way to tighten sanctions without any significant effect on either the environment or the global economy.  (To be sure, these sorts of policies always have second order effects, but the first order effects would largely offset.)

I don’t have anything quite as innovative to offer, but I would point to a similar problem of conflicting goals within the sanctions regime.  Through experience, we’ve learned that sanctions are often easy to evade.  According to the NYT, Russia has found ways to export oil to places like China and India. 

[As an aside, if you rely on certain parts of the American media you might not know that it was India that threw Russian the financial lifeline.]

On the other hand, sanctions do have some effect, and Iranian oil exports are probably lower than they would be in an unconstrained market, particularly since sanctions also inhibit the transfer of technology to develop new oil fields.

Let’s assume that sanctions on Russian energy were only able to reduce output by a small amount, say less than 10%.  In that case, the most effective technique for depriving Russia of money to fund its war would be a significantly lower global oil price.  But sanctions on Iran and Venezuela tend to raise global oil prices, which provides a boost to the Russian economy.

Of course when there are conflicts of this sort, there are no easy answers.  But we can make some conditional observations.  If Russia’s Ukraine invasion is the biggest geopolitical threat, then the case for sanctions against other oil producers becomes somewhat weaker.

To summarize, when the foreign policy establishment considers actions against any one of our adversaries, it is important to consider how the actions might indirectly impact the global market for a good such as oil, and thus how these actions will impact the behavior of our other adversaries.  Foreign policy conflicts cannot be analyzed in isolation, as the world economy is highly interconnected.