Russian fossil fuel revenues rise for the first time in three months, with export earnings from seaborne crude surging 12%

By Vaibhav Raghunandan, Europe-Russia Analyst and Research Writer; Petras Katinas, Energy Analyst; Data Scientist: Panda Rushwood; with contributions from Isaac Levi, Europe-Russia Policy & Energy Analysis Team Lead

Key findings

Russia’s monthly fossil fuel export revenues rose by 2% in February 2024 — the first rise in three months.
Russian revenues from seaborne crude oil surged by 12% (EUR 24 mn per day) but their volume of exports saw a month-on-month reduction of 3%.
Increased export revenues were linked to a rise in the price of Russian crude through the month, rather than an increase in the volume of their exports. The average price of Urals and East Siberia Pacific Ocean (ESPO) rose 14% and 3%, respectively. The prices of both grades have now risen far above the set price cap, with Urals prices back to the levels they were for the majority of 2023.
While China’s total imports of crude oil decreased (-3%) in February, imports from Russia saw only a marginal reduction (-1%).
India’s crude oil imports from Russia fell for a third consecutive month (-7%), impacted by ongoing issues with payments and OFAC’s sanctions. While some of these sanctioned vessels started delivering the Sokol shipments stranded at sea, they were mostly diverted to China.
While Belgium’s total LNG imports in February rose by a mere 4%, their imports from Russia saw a much more significant 44% rise. At the same time, Belgium’s re-exports of LNG rose by a massive 81% — a significant portion of which was shipped to Spain and China — pointing towards the country’s role in transhipping Russian gas globally.
Despite a 12% rise in France’s total monthly imports of LNG, Russian LNG imports dropped by 40%, substituted instead by LNG from the USA.
In February, 45% of Russian oil and its products were transported by tankers subject to the oil price cap. The remainder was shipped by ‘shadow’ tankers and was not subject to the price cap policy. Almost two-thirds of Russian crude shipped in February was done via ‘shadow’ tankers with tankers owned or insured in countries implementing the price cap transporting 35% of the total.
A price cap of USD 30 per barrel would have slashed Russia’s revenue by EUR 46 bn (25%) from the time the sanctions were imposed in December 2022 until the end of February 2024. This month alone, a USD 30 per barrel price cap would have reduced earnings by 26% (EUR 3.45 bn).
Since introducing sanctions until the end of February, thorough enforcement of the price cap would have slashed Russia’s revenues by 9% (EUR 15.81 bn). In February alone, full enforcement of the price cap would have slashed revenues by 9% (approximately EUR 1.2 bn).

Trends in total export revenue

In February 2024, Russia’s monthly fossil fuel export revenues saw a month-on-month rise of 2% (EUR 16.6 mn per day).
Monthly revenues from crude oil pipelines rose by 5% (EUR 7 mn per day). The increased revenues were linked to a rise in prices of Russian crude through the month, rather than an increase in export volumes. While Russian revenues from seaborne crude oil surged by 12% (EUR 24 mn per day) their volume of exports saw a month-on-month reduction of 3%.
Revenues from seaborne oil products decreased marginally (EUR 2 mn per day) month-on-month.
Russia’s revenues from LNG exports and pipeline gas decreased by 8% (EUR 3 mn per day) and 7% (EUR 5 mn per day), respectively. Revenues from LNG and pipeline gas have dropped for two consecutive months, partly due to reduced demand from Europe.
Russian revenues from coal exports fell by 9% (EUR 3.8 mn per day).

Russia’s seaborne oil export revenues surged by 5% (EUR 22 mn per day) in February, due in part to a 12% (EUR 24 mn per day) month-on-month increase in export earnings from seaborne crude.
In February, Russian earnings from fuel oil and slurry exports increased by 18% (EUR 12 mn per day).
Russia’s export earnings from gasoil and diesel decreased by 9% (EUR 10 mn per day).
Export revenues from gasoline, kerosene, and naphtha decreased by 8% (EUR 4 mn per day).

Who is buying Russia’s fossil fuels?

Coal: China has purchased 38% of all Russian coal exports since 5 December 2022. They are followed by India (20%) and South Korea (13%).
Crude oil: Since the EU/G7 bans on 5 December 2022, China has bought 49% of Russia’s crude exports, followed by India (30%), the EU (7%), and Turkey (5%). Oil via pipeline is only partially sanctioned. The EU’s crude oil imports have arrived via sea to Bulgaria and via pipeline to the Czech Republic, Slovakia, and Hungary.
LNG: The EU was the largest buyer, purchasing 49% of Russia’s LNG exports, followed by China (21%) and Japan (19%). No sanctions are imposed on Russian LNG shipments to the EU.
Oil products: Turkey, the largest buyer, has purchased 25% of Russia’s oil product exports, followed by China (12%) and Brazil (11%). The EU’s sanctions on seaborne Russian oil products were implemented on 5 February 2023.
Pipeline gas: The EU was the largest buyer, purchasing 41% of Russia’s pipeline gas, followed by Turkey (29%) and China (26%). No sanctions are imposed on Russian pipeline gas imports into the EU.

China was the largest importer of Russian fossil fuels in February, accounting for half of Russia’s total monthly exports, valued at EUR 7.5 bn.
Turkey’s imports were the second highest, comprising 19% of the total, valued at EUR 2.8 bn, while India was third with a 13% (EUR 1.9 bn) import share. The EU and Brazil contributed 12% (EUR 1.8 bn) and 5% (EUR 0.7 bn) to Russia’s exports, respectively.
Crude oil comprised 80% (EUR 5.9 bn) of China’s total imports from Russia. Oil products, pipeline gas, and coal comprised 7% (EUR 0.54 bn), 6% (EUR 0.47 bn) and 5% (EUR 0.37 bn), respectively. China also imported EUR 0.14 bn of LNG from Russia in February.
China’s total import volumes of crude oil dropped 3%, but imports from Russia suffered a mere 1% reduction in February. China’s imports of Russian crude are of the ESPO-grade variety, but in February, they also received previous shipments of Sokol that were impacted by OFAC sanctions and turned away by Indian buyers. China’s imports of oil products also declined by 2% in February, but imports from Russia saw a much more significant 36% reduction.
Turkey’s total imports from Russia consisted of oil products (44% worth EUR 1.2 bn), crude oil (28% worth EUR 0.8 bn), pipeline gas (23% worth EUR 0.64 bn), and coal (5% worth EUR 0.12 bn).
Turkey’s total import volumes of petroleum products rose 13% in February, and imports from Russia followed suit with an identical rise. Turkey has been the largest importer of oil products from Russia since the EU/G7 ban in February 2023. They have also increased their exports of oil products in the same period, prompting investigations into how they may be transhipping Russian petroleum globally. On the other hand, Turkey’s crude oil imports from Russia dropped by 9% in February, more than double their month-on-month reduction in total crude imports.
Crude oil accounted for 82% (EUR 1.6 bn) of India’s total fossil fuel imports from Russia. Oil products accounted for 11% (EUR 0.2 bn), and coal accounted for 7% (EUR 0.14 bn) of their total imports in February.
India’s import volumes of Russian crude oil decreased by 7%, subsequently also reducing its total imports by 7%. India’s crude oil imports from Russia fell for a third consecutive month, impacted by ongoing issues with payments and The Office of Foreign Assets Control (OFAC) sanctions. While some sanctioned vessels started delivering Sokol shipments stranded at sea, they were mostly diverted to China.
The EU’s imports of fossil fuels from Russia consisted of pipeline gas (39% worth EUR 0.7 bn), LNG (31% worth EUR 0.55 bn), crude oil (30% worth EUR 0.53 bn), and oil products (EUR 0.15 bn).
In February, Brazil’s Russian fossil fuel imports consisted entirely of oil products valued at EUR 0.7 bn. Their imports of petroleum products dropped 25% and imports from Russia dropped by 27% in February. Despite these drops, imports from Russia still accounted for 47% of Brazil’s total imports of oil products.

Landlocked Central and Eastern European countries and some Southern European countries received Russian fossil gas via pipeline through Ukraine and TurkStream in February 2024. Crude oil was obtained via the Druzhba oil pipeline. The EU has not banned fossil gas and crude oil via pipelines.
Hungary was the largest importer of Russian fossil fuels within the EU in February, importing fossil fuels worth EUR 253 mn. Imports comprised of crude oil and gas, delivered via pipelines, valued at EUR 226 mn and EUR 132 mn, respectively. While there was a marginal month-on-month decrease in Hungary’s pipeline gas imports from Russia, crude oil imports saw a sharp 23% (EUR 42 mn) rise.
Despite a 10% (EUR 12 mn) drop in pipeline gas imports, Slovakia’s imports of Russian fossil fuels rose by 4% (12 mn) in February. Their increased imports of crude via pipeline (14% worth EUR 24 mn) more than made up for the difference.
Belgium’s entire imports of Russian fossil fuels in February consisted of LNG valued at EUR 253 mn. While Belgium’s total volume of LNG imports rose by a mere 4%, their imports from Russia saw a much more significant 44% rise. In February, Belgium’s LNG re-exports rose by a massive 81%, with a significant portion directed towards Spain and China. Almost half of Belgium’s total imports of LNG in February were subsequently exported to other countries, pointing towards the country’s role in transhipping Russian gas across Europe.
The Czech Republic was the EU’s fourth-largest importer of Russian fossil fuels, importing EUR 116 mn of crude oil and EUR 0.74 mn of pipeline gas. While their imports of Russian crude rose by 12% (EUR 12 mn), their imports of gas via pipeline dropped by 17% (EUR 15 mn).
In February, France was the EU’s fifth-largest importer of Russian fossil fuels. The majority of their imports consisted of LNG valued at EUR 161 mn. Despite a 12% rise in total monthly LNG imports to France, Russian LNG imports dropped by 40%, substituted by LNG from the USA.

In February, the port of Dongying in China was the foremost destination for Russian fossil fuels. The port imported EUR 544 mn worth of Russian fossil fuels of which 86% (EUR 465 mn) was crude oil. The remainder was oil products worth EUR 79 mn.
The port of Mersin in Turkey was the second-highest importer of Russian fossil fuels in February. All of Mersin’s imports from Russia were oil products worth EUR 394 mn.
Turkey’s Yarimca-Izmit port was the third-largest importer of Russian fossil fuels (EUR 377 mn). The port’s imports were split almost evenly between crude oil (EUR 187 mn) and oil products (EUR 190 mn).
Dongjiakou in China was the fourth highest destination, importing Russian fossil fuels valued at EUR 371 mn. While crude oil accounted for most of its imports (EUR 369.9 mn), the port also imported EUR 1 mn of coal.
Dakar in Senegal rounded off the list of top ports importing Russian fossil fuels in February. The port imported Russian oil products valued at EUR 265 mn in the month.

How are oil prices changing?

In February, the average Urals Europe cost and freight (CFR) spot price saw a month-on-month 14% rise to surge significantly above the price cap at USD 73.21 per barrel.
The prices for the East Siberia Pacific Ocean (ESPO) and Sokol blends of Russian crude oil, primarily associated with Asian markets, rose 3% in February for a second consecutive month. The average price for ESPO was USD 77.27 per barrel in February.
Throughout this period, vessels owned or insured by the G7 and European countries continued to load Russian oil in all Russian port regions. These cases call for further investigation for breach of sanctions.

Russia remains highly reliant on the European and G7 shipping industry

In February, 45% of Russian oil and its products were transported by tankers subject to the oil price cap. The remainder was shipped by ‘shadow’ tankers and was not subject to the price cap policy.
65% of Russian crude oil was transported by ‘shadow’ tankers, while tankers owned or insured in countries implementing the price cap accounted for 35%.
‘Shadow’ tankers transporting oil products handled 41% of Russia’s total volume of products. The remaining volume was shipped by tankers subject to the price cap policy.
Tankers in the Pacific region were loaded with Russian oil at ports like Kozmino in Russia, where the ESPO pipeline ends and is connected to a refinery. Here, the ESPO crude oil grade is exported at prices exceeding the cap.
Russia’s reliance on EU/G7 owned or insured vessels provides the Price Cap Coalition with adequate leverage to lower the price cap and implement better monitoring and enforcement that would considerably lower Russia’s oil export revenues.

How can Ukraine’s allies tighten the screws?

Russia’s fossil fuel export revenues have fallen since sanctions were implemented, showing their impact on Putin’s ability to fund the war. However, much more should be done to limit Russia’s export earnings and constrict the Kremlin’s war chest. This includes lowering the oil price cap, increasing monitoring and enforcement of sanctions, and banning unsanctioned fossil fuels such as LNG and pipeline fuels that are legally allowed into the EU.
Measures must be taken by sanctioning countries to prevent Russia’s growth in ‘shadow’ tankers immune to the oil price cap policy. Sanction-imposing countries should ban the sale of old tankers to owners registered in countries that do not implement the oil price cap policy. This would help limit the growth of the ‘shadow’ tankers observed since Russia invaded Ukraine.
OFAC and the Office of Financial Sanctions Implementation (OFSI) must continue to sanction ‘shadow’ tankers as doing so hinders Russia’s ability to transport its oil above the price cap. CREA estimates that OFAC’s sanctioning of ‘shadow’ tankers has widened the discount that Russia offers buyers of its oil and cuts Russia’s crude oil export revenues by 5% (EUR 512 mn per month).

A price cap of USD 30 per barrel (still well above Russia’s production cost that averages USD 15 per barrel) would have slashed Russia’s revenue by EUR 46 bn (25%) since the sanctions were imposed in December 2022 until the end of February 2024. February alone would have seen a reduction of EUR 3.45 bn (26%) with a USD 30 per barrel price cap.
Lowering the price cap would be deflationary, reducing Russia’s oil export prices and inducing more production from Russia to make up for the drop in revenue.
Since introducing sanctions until the end of February 2024, thorough enforcement of the price cap would have slashed Russia’s revenues by 9% (EUR 15.81 bn). In February alone, full enforcement of the price cap would have slashed revenues by 9% (approximately EUR 1.2 bn).
Enforcement agencies overseeing the sanctions must take proactive measures against violating entities, including insurers registered in price cap coalition countries, shippers and vessel owners.
Despite clear evidence of violations, there must be more information on enforcement agencies implementing penalties against shippers, insurers, or vessel owners in the public domain. Penalties against violating entities increase the perceived risk of being caught.
OFAC should continue sanctioning vessels that have violated the price cap policy. Other enforcement agencies, such as the OSFI, should ramp up investigations of entities that appear to have violated sanctions.
Penalties for those guilty of violating the price cap must be significantly harsher. Current penalties include a 90-day ban of vessels from securing maritime services after violating the price cap, a mere slap on the wrist. Vessels should be fined and banned in perpetuity if found guilty of violating sanctions.
The lack of proper monitoring and enforcement and rising oil prices have increased Russia’s export revenues to fund its war against Ukraine.

Relevant reports:

The monthly update on Russian fossil fuel exports and sanctions was prepared by Isaac Levi, Europe-Russia Policy & Energy Analysis Team Lead, CREA; Petras Katinas, Energy Analyst; Panda Rushwood, Data Scientist; and Vaibhav Raghunandan, Europe-Russia Analyst and Research Writer.

Note on methodology:
Update 2023-10-19 – We now use Kpler to estimate seaborne exports from Russia and other countries. This change increases our tracker’s estimate of exports from Russia to the world by EUR 77.8 bn (+18% increase) and the exports to the EU by EUR 12.4 bn (+2.8% increase).
We have also changed how we receive protection and indemnity (P&I) insurance information about ships to additionally attain data from known P&I providers directly as well as from Equasis. This is to make sure that we have recorded the correct start date for a ship’s insurance.
Find out more details on the changes in our methodology that are explained in our article about the migration from automatic identification system (AIS) data providers to the Kpler dataset.