LONDON: Russia’s oil-export revenues fell to their lowest in less than a year in February, as buyers of the country’s barrels largely complied with price caps and sanctions, according to the International Energy Agency.
Money flowing into the country from international oil sales fell to $11.6 billion last month, down 40% from a year earlier. IEA, The agency estimated that crude oil and product exports averaged 7.5 million barrels per day in February, the lowest since September.
“While it has been relatively successful in maintaining volume, Russia’s oil revenue “has taken a hit,” the IEA said in its monthly report on Wednesday.
Western countries and their allies have taken a number of steps to reduce Russia’s oil income, a major source of revenue for the national budget, to limit the Kremlin’s ability to finance its war in Ukraine.
The coalition of nations has imposed limits on the price of Russian crude and refined products, designed to keep the country’s energy flowing to world markets while reducing revenues. The price restrictions came on top of EU restrictions on imports of nearly all seaborne Russian crude and petroleum products, which the Kremlin has historically been its biggest energy market.
Sanctions forced Russia to find alternative markets in the Middle East and Latin America and to expand supplies in Asia, yet the western cap gave new customers the advantage of negotiating lower supply prices. The sanctions stipulate that buyers from third countries can access Western services such as insurance and shipping only if they comply with the cap.
price caps
According to the IEA, early market signals indicated that sales of Russian crude oil and petroleum products were well below the price cap last month. The agency’s calculations could be a factor in discussions among European countries on Wednesday, with Estonia, Lithuania and Poland arguing that the ceiling could be too low.
The IEA calculated using data from Argus Media Group and Kpler that the weighted average export price of Russian crude was $52.48 a barrel, compared to a cap of $60. Estimates are for so-called free-on-board or FOB value, which does not include shipping and insurance costs.
Ural crude, Russia’s main export blend, sold for $45.27 on the Black Sea market, while blends such as ESPO, Sakhalin and Sokol designed to be shipped to Asia traded well above the cap, according to the IEA. Went.
Low-value products including Russian diesel and gasoline, and naphtha and fuel oil also traded on average below their caps of $100 and $45 a barrel, respectively, the data show.
The IEA drew a different conclusion to the US Treasury, estimating that only 25% of Russian oil sales occur under the cap. Still, both sides say the sanctions are doing their job by curbing Russia’s budget revenues while keeping export flows strong.
The IEA revised its outlook for Russia’s average 2023 oil production to 10.4 million barrels per day, still down 740,000 barrels per day from last year.
The country’s production has “held up surprisingly well following the invasion of Ukraine as measures have been put in place to facilitate the re-routing of crude exports to new markets”, according to the IEA.
In retaliation for Western sanctions, Russia pledged in March to cut its oil production by 500,000 barrels per day. So far, there is no sign of export flows being affected, according to Bloomberg ship-tracking data. Russia’s refinery output fell 2% on February levels in the first days of March, but the cuts may be partly the effect of seasonal maintenance.
Money flowing into the country from international oil sales fell to $11.6 billion last month, down 40% from a year earlier. IEA, The agency estimated that crude oil and product exports averaged 7.5 million barrels per day in February, the lowest since September.
“While it has been relatively successful in maintaining volume, Russia’s oil revenue “has taken a hit,” the IEA said in its monthly report on Wednesday.
Western countries and their allies have taken a number of steps to reduce Russia’s oil income, a major source of revenue for the national budget, to limit the Kremlin’s ability to finance its war in Ukraine.
The coalition of nations has imposed limits on the price of Russian crude and refined products, designed to keep the country’s energy flowing to world markets while reducing revenues. The price restrictions came on top of EU restrictions on imports of nearly all seaborne Russian crude and petroleum products, which the Kremlin has historically been its biggest energy market.
Sanctions forced Russia to find alternative markets in the Middle East and Latin America and to expand supplies in Asia, yet the western cap gave new customers the advantage of negotiating lower supply prices. The sanctions stipulate that buyers from third countries can access Western services such as insurance and shipping only if they comply with the cap.
price caps
According to the IEA, early market signals indicated that sales of Russian crude oil and petroleum products were well below the price cap last month. The agency’s calculations could be a factor in discussions among European countries on Wednesday, with Estonia, Lithuania and Poland arguing that the ceiling could be too low.
The IEA calculated using data from Argus Media Group and Kpler that the weighted average export price of Russian crude was $52.48 a barrel, compared to a cap of $60. Estimates are for so-called free-on-board or FOB value, which does not include shipping and insurance costs.
Ural crude, Russia’s main export blend, sold for $45.27 on the Black Sea market, while blends such as ESPO, Sakhalin and Sokol designed to be shipped to Asia traded well above the cap, according to the IEA. Went.
Low-value products including Russian diesel and gasoline, and naphtha and fuel oil also traded on average below their caps of $100 and $45 a barrel, respectively, the data show.
The IEA drew a different conclusion to the US Treasury, estimating that only 25% of Russian oil sales occur under the cap. Still, both sides say the sanctions are doing their job by curbing Russia’s budget revenues while keeping export flows strong.
The IEA revised its outlook for Russia’s average 2023 oil production to 10.4 million barrels per day, still down 740,000 barrels per day from last year.
The country’s production has “held up surprisingly well following the invasion of Ukraine as measures have been put in place to facilitate the re-routing of crude exports to new markets”, according to the IEA.
In retaliation for Western sanctions, Russia pledged in March to cut its oil production by 500,000 barrels per day. So far, there is no sign of export flows being affected, according to Bloomberg ship-tracking data. Russia’s refinery output fell 2% on February levels in the first days of March, but the cuts may be partly the effect of seasonal maintenance.
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