December 4, 2022

Study finds Russian oil revenues soar despite sanctions

Study finds Russian oil revenues soar despite sanctions

Russia’s invasion of Ukraine elicited global condemnation and harsh sanctions aimed at affecting Moscow’s war chest. A new analysis shows that Russia’s revenues from fossil fuels, its largest export, rose to record levels in the first 100 days of its war with Ukraine, spurred by windfall gains from oil sales amid rising prices.

Russia earned an estimated €93 billion in oil, gas and coal exports in the first 100 days of the country’s invasion of Ukraine. According to the data It was analyzed by the Center for Energy and Clean Air Research, a research organization based in Helsinki, Finland. About two-thirds of those gains, equivalent to about $97 billion, came from oil, and most of the rest from natural gas.

“The current rate of revenue is unprecedented, because prices are unprecedented, and export volumes are close to their highest recorded levels,” said Laurie Myllyvirta, an analyst who led the center’s research.

Fossil fuel exports have been a major enabler of Russia’s military buildup. In 2021 revenues from oil and gas only accounted for 45 percent From Russia’s federal budget, according to the International Energy Agency. The think tank estimated that revenues from Russia’s fossil fuel exports exceed what the country spends on its war in Ukraine, a sobering finding. Momentum shifts In favor of Russia, as it concentrates its forces on important regional targets amid a shortage of weapons among Ukrainian soldiers.

Ukrainian officials have again called on countries and companies to completely stop their trade with Russia. “We ask the world to do everything possible in order to isolate Putin and his war machine from all possible financing, but it is taking a very long time,” Oleg Ustenko, economic adviser to Ukrainian President Volodymyr Zelensky, said in a statement. Interview from Kyiv.

Ukraine has also been tracking Russian exports, and Ustenko described the think tank’s numbers as appearing conservative. However, the bottom line is the same, he said: Fossil fuels continue to fund the Russian war. You can stop importing Russian caviar and Russian vodka, which is fine, but certainly not enough. It should stop importing Russian oil.

Although Russia’s fossil fuel exports have begun to decline somewhat in volume, as more countries and companies avoid trade with Moscow, higher prices have offset the effects of this decline. The research found that Russian export prices for fossil fuels were on average about 60 percent higher than last year, even taking into account the fact that Russian oil is about 30 percent below international market prices.

Europe, in particular, has struggled to wean itself off Russian energy, even as many countries have sent military aid to Ukraine. The European Union has made the most progress in reducing its imports of natural gas from Russia, buying 23 percent less on the first day of the invasion than in the same period the previous year. However, the Center for Research on Energy and Clean Air found that income at Gazprom, Russia’s state-owned gas giant, remained nearly twice as high as it was a year earlier, thanks to higher gas prices.

The European Union also cut imports of Russian crude oil, which fell 18 percent in May. The research showed that India and the United Arab Emirates compensated for this decline, resulting in no net change in the volume of Russian oil exports. India has become a major importer of Russian crude oil, buying 18 percent of the country’s exports over a 100-day period.

The United States brought about a decline in Russia’s profits, banning all imports of Russian fossil fuels. However, the United States imports refined oil products from countries such as the Netherlands and India that most likely contain Russian crude, a loophole for oil from Russia to make its way to America.

Overall, China was the largest importer of Russian fossil fuels during the 100-day period, outperforming Germany, Italy, and the Netherlands. China imported most of the oil; Japan was the largest buyer of Russian coal.

The most stringent ban is coming. Late last month, the European Union agreed to a ban covering nearly three-quarters of Russian oil shipped to the region, although that will not be implemented for six months. Britain said it would also phase out Russian oil imports by the end of the year. But Hungary, the Czech Republic and Slovakia, which receive Russian oil via pipelines, are still exempt. Ships owned by Europe and the United States also continue to transport Russian oil.

Europe is also accelerating its transition away from fossil fuels entirely. The new EU target aims to increase the region’s share of electricity from renewable forms of energy to 63 percent by 2030, compared to the previous projected target of 55 percent.

Janet Yellen, US Treasury Secretary, said last week that Washington was in talks with its European allies about forming a cartel that would put a cap on the price of Russian oil roughly equal to the price of production. It said that would reduce Russia’s fossil fuel revenues while maintaining the flow of Russian oil to global markets, stabilizing prices, and staving off a global recession. Senate Finance Committee.

Mr Ostenko, Ukraine’s economic assistant, said he welcomed the move as a temporary measure until a full ban could be imposed. He also suggested that countries take the difference between world prices and the maximum price of Russian oil and pay it into a fund to help Ukraine’s reconstruction.

“Then we will be able to cut a lot of the funding of the Russians, almost immediately,” he said.