Image Source: Politico
According to a report made public, Russia gained about $100 billion (£82.3 billion) from oil and gas exports in Ukraine during the first 100 days of the conflict.
According to the independent Centre For Research on Energy and Clean Air (CREA), revenues have been declining since March as many countries boycott Russian supply, but they remain high. It also raised concerns about possible loopholes in efforts to limit Russian imports.
The European Union, the United States, and the United Kingdom are among the countries that have vowed to reduce Russian imports.
However, the CREA analysis concluded that during the first 100 days of the Ukraine crisis, from February 24 to June 3, Russia gained $97 billion from fossil fuel exports. Moreover, 61 percent of these imports, totaling $59 billion, came from the European Union.
Overall, Russian oil and gas exports are declining, and Moscow’s earnings from energy sales have fallen from a high of over $1 billion per day in March to well under $1 billion per day. However, during the first 100 days, income exceeded the cost of the Ukraine war, with the CREA calculating that Russia is spending $876 million per day on the invasion.
By the end of 2022, the EU intends to prohibit Russian oil imports by sea, resulting in a two-thirds reduction in imports.
In March, the union also agreed to cut Russian gas imports by two-thirds in a year.
It has, however, been unable to reach an agreement on an absolute prohibition thus far. In the meantime, the United States has placed a total ban on Russian oil, gas, and coal imports. As a result, the UK will have stopped buying Russian oil by the end of the year.
The EU’s proposed oil embargo, according to the CREA analysis, will have a considerable impact. It noted, however, that huge amounts of Russian crude oil were now being delivered to India, which had boosted its share of Russia’s overall crude exports from roughly 1% before the invasion of Ukraine to 18% in May.
According to the report, a “substantial share” of this was processed and sold on, typically to consumers in the United States and Europe, and this was “an essential loophole to shut.” It went on to say that tough penalties against vessels transporting Russian fuel would severely curtail the practice’s scope.
According to the report, much of Russia’s oil is transported by ship as it seeks new markets, and European and American firms control the vast majority of the ships. According to the research, France, China, the United Arab Emirates, and Saudi Arabia are among the nations that have increased their imports of Russian petroleum.
This report appears to be full of bad news on the surface. High prices negate efforts to cut consumption; thus, energy sales still fuel the war in Ukraine.
But that doesn’t rule out the possibility of pressure on Moscow. The authors of the paper estimate that a partial EU oil embargo on Russia would result in a $36 billion annual revenue loss. Gas exports have already plummeted, and initiatives are in the works to significantly reduce Europe’s dependency on Russia.
However, embargoes must work. According to the research, India is processing an increasing amount of Russian oil. Some of those refined items are already returning to European markets. This is a clear potential loophole because the EU ban doesn’t cover refined products.
As Russian oil is diverted from pipelines and onto ships in search of new markets, demand for ships to transport it is growing. However, European businesses own the vast bulk of oil tankers now in service.
Issues like these must be addressed for sanctions against Russia to succeed.