Western nations implemented far-reaching sanctions against Russian crude oil and oil products as a measure to reduce Russia’s oil revenues.
The International Energy Agency (IEA) has reported that in February 2023, Russia’s total exports of oil and petroleum products declined to 7.5 million barrels per day (bpd), down from an average of 7.7 million bpd in 2022 (and 7.5 million bpd in 2021).
According to the IEA’s estimates, Russia’s earnings from exporting oil and oil products dropped to $11.6 billion in February, compared to monthly averages of $18.7 billion in 2022 and $14.9 billion in 2021.
#BreakingNews Russia's oil export revenue sank by 42% in February as sanctions bit 🇷🇺 oil exports fell by 500 kb/d to 7.5 mb/d in February as the #EU embargo on refined oil products came into force. @AFP
— Share_Talk ™ (@Share_Talk) March 15, 2023
Here are the sanctions that have been imposed, their effects, and Russia’s reaction:
SANCTIONS ON CRUDE OIL
- Since December 5th, the G7, the European Union, and Australia have ceased purchasing all Russian crude oil transported by sea. This accounts for two-thirds of all European Union imports of Russian crude.
- Additionally, the G7, the European Union, and Australia have jointly decided to prohibit the use of Western-provided maritime insurance, finance, and brokering for seaborne Russian oil that is priced above $60 per barrel as of December 5th.
- The demand for used oil tankers skyrocketed as newly established companies sought to transport Russian crude.
- On February 1st, Russian President Vladimir Putin issued a decree that prohibits the exportation of crude oil and oil products to countries that comply with the production limit.
- The Russian government barred domestic oil exporters and customs agencies from adhering to the Western-imposed price limits on Russian crude oil.
- According to Kommersant, Russia’s oil and gas condensate production climbed to pre-sanction levels, approximately 1.508 million tonnes per day, in February for the first time.
- In early February, Russian Deputy Prime Minister Alexander Novak reassured that the country’s oil output and exports remain stable, despite the presence of Western sanctions and price limitations.
- Novak stated that Russian oil producers have encountered no problems in obtaining export agreements despite Western sanctions and price caps.
- Russia’s crude oil loadings from the Baltic ports of Primorsk and Ust-Luga, as well as the Black Sea port of Novorossiisk, were around 10% below the goal for February.
- According to market sources and Reuters estimates, Russia intends to reduce oil exports and transit from its western ports by 10% per day from February.
- President Putin has authorized a law establishing the Urals crude oil discount for tax calculations.
- Russia is planning to reduce oil production by 500,000 barrels per day, equivalent to approximately 5% of output, in March.
SANCTIONS ON OIL PRODUCTS
- As of February 5th, the G7 economies, the European Union, and Australia ceased purchasing all Russian oil products delivered by sea.
- The European Union established price limits on seaborn products that are traded at a premium to crude oil, primarily diesel, at $100 per barrel, and on products that are traded at a discount, such as fuel oil and naphtha, at $45 per barrel, both effective from February 5th.
- In February, the European Union lifted sanctions on oil products made from Russian oil outside the country and removed the price limit on those products blended with oil from other countries.
- Traders and Refinitiv data reported that Russia’s diesel exports to Turkey reached an all-time high in February.
- According to traders and Refinitiv data, Russia exported diesel to Saudi Arabia via ship-to-ship loading in February.
- Traders and Refinitiv data reported that Russia began exporting diesel to Saudi Arabia in February.
- In February, Russia exported a record quantity of diesel to Brazil, according to traders and Refinitiv data.
- Following the EU embargo, Russia redirected diesel exports to Africa, Asia, and ship-to-ship, according to traders and Refinitiv data.
- India expressed interest in naphtha and fuel oil but not diesel after Russia imposed price caps.
- According to industry sources and Reuters calculations, Russia’s seaborne oil product exports decreased by 10.4% on a daily basis month on month in February.
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