European countries scramble to search out alternative sources of oil and gas following Russia’s full-scale invasion of Ukraine in February 2021.
Bloomberg | Bloomberg | Getty Images
Russia’s revenue from fossil fuel exports fell in December, in response to a latest report, making it much harder for President Vladimir Putin to finance the war in Ukraine.
Ukrainian officials and activists say the findings illustrate the effectiveness of channeling Russian oil revenues and highlight the urgent need for Western policymakers to extend financial pressure on Moscow to assist Kiev emerge victorious.
Published Wednesday by the Center for Energy and Clean Air Research, an independent Finnish think tank, the report found that the primary month of the EU ban on imports of Russian oil by sea and the G-7 price cap cost Moscow around €160 million ($171.8 million) a day.
The CREA report found that Western actions were largely accountable for the 17% drop in Russia’s fossil fuel export revenues in the last month of 2022. Because of this Russia – one in every of the world’s largest oil producers and exporters – saw a drop in revenues from fossil fuel exports fossil fuel exports to their lowest level since Putin launched a full-scale invasion of Ukraine in late February.
“The EU oil ban and oil price cap have finally moved on and the impact is as significant as expected,” Lauri Myllyvirta, CREA’s chief analyst, said in an announcement.
“This shows that we’ve the tools to assist Ukraine overcome Russian aggression. It’s essential to lower the worth cap to a level that denies the Kremlin taxable oil profits and to limit the remaining oil and gas imports from Russia, Myllyvirta said.
The G-7, Australia and the EU imposed a price cap on Russian oil of $60 per barrel on December 5. This coincided with a move by the EU and the UK to ban Russian oil imports by sea.
Together, these measures represented by far probably the most significant move to curb fossil fuel export revenues that finance the Kremlin’s assault on Ukraine.
Russian President Vladimir Putin at a gathering in the Moscow Kremlin on January 6, 2022.
Mikhail Klimentev | afp | Getty Images
Energy analysts were skeptical in regards to the impact of the worth cap on Russian oil, especially since Moscow was capable of divert most of its European shipments by sea to China, India and Turkey.
Russia retaliated against Western measures late last month by banning oil sales to countries that respect the worth cap.
Kremlin spokesman Dmitry Peskov previously said the Western price cap on Russian oil wouldn’t affect his ability to proceed what he describes as a “special military operation” in Ukraine. Peskov also warned that the measure would destabilize global energy markets, reported Reuters.
“The financial pedigree of Putin’s war”
Oleg Ustenko, an economic adviser to Ukrainian President Volodymyr Zelensky, said on Wednesday that while it’s “excellent news” that Russia is losing revenue from fossil fuel exports consequently of Western measures, it’s “definitely not enough.”
Ustenko reiterated Zelensky’s calls for a much lower cost cap, saying at a briefing that any escalation of economic sanctions against the Kremlin should bring the oil price cap right down to a goal range of $20 to $30 a barrel.
“There is no such thing as a reason to attend and watch,” Ustenko said. “It’s clear now.”
“The EU and the G7 have the facility and all of the means to chop this bloodline. Only power and money appeal to the Kremlin.
Svitlana Romanko
Founder and Director of Razom We Stand
The CREA report found that these measures resulted in a drop in the amount of supplies and costs of Russian oil, which reduced the country’s export revenues by €180 million a day.
Based on the report, by boosting exports of refined petroleum products to the EU and the remainder of the world, Moscow has been capable of recoup €20 million a day, resulting in a each day net lack of €160 million for the reason that Western measures took effect.
Based on the report, Russia still earns around €640 million a day from fossil fuel exports.
“The primary month of the embargo proves what we’ve been saying for the reason that starting of the invasion: revenues from fossil fuel exports are the financial lifeblood of Putin’s war,” said Svitlana Romanko, founder and director of the Ukrainian human rights group Razom We. Stand (Together We Stand).
“The EU and the G7 have the facility and all of the means to chop this bloodline,” she added. “Only power and money speak to the Kremlin.”
Romanko called on the worth coalition to lower the worth cap, strengthen enforcement of the embargo and introduce additional sanctions to shut the gaps.
The CREA report says lowering Russia’s oil price ceiling to $25-30 a barrel, a variety it notes continues to be “well above” production and transportation costs, would cut back Russia’s oil export revenues by not less than €100 million each day.
It says the Western price cap coalition prides itself on “strong leverage” to lower cost caps, adding that “Russia has not found a viable alternative to G7 owned and/or insured vessels to move Russian oil and petroleum products from Baltic ports and Black Sea.