Russia oil revenue up 50% despite sanctions, IEA says

·3-min read
Russian president Vladimir Putin. The country's total oil export revenues were up 50% this year despite trade restrictions. Photo: Contributor/Getty Images
Russian president Vladimir Putin. The country's total oil export revenues were up 50% this year despite trade restrictions. Photo: Contributor/Getty Images

Russia's oil revenues withstood a boycott from global companies and most countries following its invasion of Ukraine, the International Energy Agency (IEA) said on Thursday.

The Pairs-based agency said the Kremlin earned around $20bn (£16.4bn) each month in 2022 from combined sales of crude and products amounting to about 8 million barrels a day (bpd). Total oil export revenues were up 50% this year.

Moscow's exports rebounded last month by 620,000 bpd from March to 8.1 million bpd back to their January and February average as India and China picked up supply rerouted away from the US and Europe.

However, despite working on a Russia crude import ban, the EU remained the top market for oil exports in April, according to the IEA's monthly market report.

Volumes decreased 535,000 bpd from the start of the year, and the bloc now accounts for 43% of Russian crude exports, down from around 50% previously.

Brent crude (BZ=F) fell 1.5% to $105.84 a barrel, while US light crude (CL=F) was 1.6% lower to $104.01 at the time of writing.

The agency also signalled a U-turn on its previous forecast in March which it warned 3 million bpd could go offline from April, lowering the figure as supplies fell by 1 million bpd last month.

It estimates these losses could triple in the second half of 2022, and expects the number to rise to 1.6 million bpd in May, 2 million in June and nearly 3 million from July onwards if sanctions expand or deter further buying.

"If agreed, the new embargoes would accelerate the reorientation of trade flows that is already underway and will force Russian oil companies to shut in more wells," the IEA said.

The IEA, which advises major economies, kept its outlook for world crude markets largely unchanged.

Global fuel markets are tight and could face more strain in the coming months as demand in China rebounds amid new coronavirus lockdowns, suggesting that a production boost elsewhere and slower Chinese demand growth will stave off a big demand deficit.

"Over time, steadily rising volumes from Middle East OPEC+ and the US along with a slowdown in demand growth is expected to fend off an acute supply deficit amid a worsening Russian supply disruption," it said.

It warned that "soaring pump prices and slowing economic growth are expected to significantly curb the demand recovery through the remainder of the year and into 2023" as measures aimed at containing the coronavirus in China were driving an extended economic slowdown in the country.

Read more: Oil prices tumble to five-week low

It comes as EU sanctions against Russian state-linked enterprises like oil giant Rosneft (ROSN.ME) are poised to take effect from 15 May and ahead of a proposed full EU ban on the country's supplies.

Russian shipments continued to flow despite several energy firms, including BP (BP.L), Shell (SHEL.L) and Norway’s Equinor (EQNR.OL) vowing to stop purchases as they exited the market amid the fallout from the Ukraine war.

Last week, the European Commission proposed a phased embargo on Russian oil imports and products.

On Tuesday, EC president Ursula von der Leyen said the bloc had made some progress in talks over its proposed ban on Russian crude imports, but warned further work was needed.

The bloc is poised to drop a proposed ban on ships carrying Russian crude following objections from member states including Greece.

It is also planning to give Hungary, Slovakia and the Czech Republic more time to comply with sanctions on imports as the plan needs an unanimous vote by EU member states this week to pass.

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