The Kyiv Post ran my piece from last week as an op-ed: The US, Ukraine and Trust . Thank you, Bohdan. Perhaps it will help gain a bit of traction with Ukrainian officialdom.

Let me start by returning to my previous post on the Urals oil price, which has broken through the $60 cap. Several readers pointed me to an analysis in Axios, The price cap on Russian oil seems to be working. The Axios article covers the period through March. The Urals price breakout occurred only in April, briefly a couple of weeks ago and more visibly this past week. This period is not covered in the Axios piece. Having said that, there are any number of problems with Price Cap even as described by Axios, chief among them that the Ukrainians have left about $50 bn on the table in the last year, enough to offset US Ukraine-related expenses by perhaps two-thirds or sufficient to buy 100 F-16s every two weeks. This is a big deal and it will become a very, very big deal. That's one takeaway from the Urals price breakout.

Russian Oil Production

Russian oil production continues to run ahead of the forecasts of the EIA, the US Energy Information Administration, the statistics arm of the US Department of Energy. The EIA estimates Russian oil production at 10.83 mbpd for the month of March. This is 0.3 mbpd below the prior month and 0.9 mbpd (4.4%) below Russia's pre-war output. Russian oil production is declining, but not much, and in March was running a whopping 1.3 mbpd above the EIA's January forecast.

Further, on Friday, CNN reported that Russian oil exports have regained pre-war levels. Yahoo Finance chimes in, noting that China and India are buying so much Russian oil that Moscow's now selling more crude than it was before invading Ukraine.

Given the Urals price breakout and the resumption of normal oil exports from Russia, the EIA's expectations for further reductions in Russian oil production are likely to be thwarted. Indeed, I would not be surprised if Russia's oil production started to move closer to the Black Market Forecast which I made last July and can be seen on the graph below.

The EIA's substantial forecasting miss arises from the same source as the failure of the Price Cap: a lack of black market economic models. (Indeed, this is the same issue DHS and the Bipartisan Policy Center face with illegal immigration, which is functionally the same problem.) This is our unique field of expertise.