Status: 04/14/2023 2:45 p.m
Russia exported more oil last month than it has in three years. But exports are now flushing significantly less money into Russian coffers.
The war of aggression against Ukraine has resulted in massive Western sanctions for Russia. A sticking point that should noticeably weaken the Russian economy is the abandonment of Russian energy resources. But according to the International Energy Agency (IEA), Russia was able to sell more oil abroad last month than it has in three years. However, with a significant reduction in price.
According to the Paris-based IEA’s monthly report, Russia was able to export an average of 8.1 million barrels of oil per day to other countries in March. An increase of around 600,000 barrels a day compared to February – and the highest export value since April 2020. After the loss of western customer countries, including Germany, Russia is now increasingly selling its oil to China and India.
Revenue plummeted by about 43 percent
However, oil exports meanwhile bring Russia significantly less income: According to figures from the IEA, Russia earned around 12.7 billion US dollars from oil sales abroad in March. Compared to the previous month, this means an increase of around one billion US dollars. In a year-on-year comparison, however, Russia has to accept a slump in its revenues of around 43 percent.
Until March last year, Russia was the third largest oil producer in the world and responsible for around twelve percent of global oil production. At that time, almost half of Russian oil exports went to the EU: in 2021, the member states imported crude oil worth 48 billion euros and refined oil products worth 23 billion euros. Before the start of the Russian war of aggression against Ukraine and the subsequent punitive measures, Germany alone covered around 35 percent of its oil requirements with imports from Russia.
However, after the outbreak of war, the federal government aimed to move away from Russia’s energy resources as quickly as possible – and since the beginning of this year, no oil has passed from Russia through the Federal Republic as part of the oil embargo decided by the EU.
Lower production through OPEC+
In addition to the embargo, there is a price cap for Russian crude oil that the EU, the G7 countries and Australia agreed on in early December. At the beginning of February, the price cap was extended to all Russian oil products. Russia then announced that it would cut its oil production by 500,000 barrels a day from March.
The supply of crude oil on the world market is likely to be further reduced by a decision by the OPEC+ oil alliance. Against the background of the significantly lower oil prices compared to the previous year, eight members decided at the beginning of April to reduce their oil production from May. Overall, production is expected to be around a million barrels (159 liters) per day lower from next month – not including the production restricted by Russia.
From the perspective of the IEA, however, global demand for crude oil will also decrease slightly. The agency estimates total demand at an average of 101.9 million barrels per day. That’s 100,000 barrels less than last expected.