Russian oil exports yielding more revenue than before Ukraine conflict – Bloomberg
Russia’s monthly revenues from oil exports are now higher than before the beginning of the military operation in Ukraine, indicating that Western sanctions on the sector have failed, Bloomberg reported on Wednesday.
Moscow’s income from crude sales almost doubled from April to October, despite international pressure and widespread predictions of a huge deficit. Russia’s net oil revenues of $11.3 billion in October accounted for 31% of the country’s overall net budget revenue for the month, the outlet said, citing the Russian Finance Ministry.
From January to September this year, owners of domestic vessels and an alleged shadow fleet of tankers collectively shipped more than 70% of Russian oil cargos, “allowing Moscow to maintain control over its exports and progressively increase prices,” the article stated.
The sanctions on Russian oil introduced by the G7 and EU late last year were conceived as a means to curtail Moscow’s energy revenues without causing a spike in global energy prices.
The restrictions, however, have created an unexpected “byproduct,” such as the reshaping of the financial architecture of the oil and maritime trade “in a way that some experts say might be hard to reverse at the end of the conflict or after the eventual lifting of the existing sanctions regime.”
In response to the sanctions, Russia has rerouted most of its energy exports to Asia – particularly to India and China, where the country’s oil has been sold well above the West’s $60-per-barrel price cap.
Data from Indian customs shows that the price paid for Russian oil averaged $72 a barrel this year by the time it reached the Asian country, which is $12 higher than the price initially declared at the point of export in Russia.
Russia has shipped nearly 3.5 million barrels of crude a day this year, with around $11 billion going into a delivery spread, the outlet said.
“Some of that will represent legitimate shipping costs, but almost all of it goes through anonymous traders or unknown shipping companies,” Bloomberg wrote.
“The shadow fleet and alternatives to Western maritime insurance are not new. Iran has used them for years. Now that a massive producer like Russia is using them, they have become more mainstream,” according to Eddie Fishman, a senior research scholar at Columbia University’s Center on Global Energy Policy, who has helped draw up US sanctions on Iran and Russia.
An advocate for stricter measures, he admitted that alternatives to Western services will eventually become a structural feature of the global oil trade.
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