Oil exports from Russia by sea fell by 56% a week after the introduction of Western sanctions. Since December 5, the EU has imposed an oil embargo on shipping oil from Russia, as well as a ceiling price mechanism for Russian oil, which is set at $60 per barrel. All oil sales above this level are at risk of being sanctioned. Also, Western companies are prohibited from providing insurance, financial, logistics and other services if oil is sold at a price above the “ceiling”. The decline in exports was recorded by Bloomberg, which monitors oil flows from Russian ports on a weekly basis.
The agency attributes part of the decline in exports to repair work in Russian ports in the Baltic, and part to a shortage of ships ready to supply Russian oil to Asian markets from eastern ports. The agency notes that such a sharp drawdown may be due, among other things, to temporary factors, such as severe weather conditions, and calls for a careful assessment of this decline, without making long-term conclusions yet, since in a week the supply volumes may return to relatively normal values.
In absolute terms, oil exports for the week fell by 1.86 million barrels per day (-56%) to about 1.6 million barrels, setting an absolute minimum for all of 2022. The agency notes that if the problems in the Baltic port of Primorsk have already been resolved and it is operating at full capacity, then the port of Kozmino, from where oil is supplied from Eastern Siberia, has faced the refusal of some players to work with Russian oil, since the sale price is higher than the level of the “western ceiling." The agency claims that at least two major shipping companies have recalled their tankers.
After the imposition of sanctions against Russian oil, only 4 major buyers of fuel from Russia remained in the world: India, China, Turkey and Bulgaria, which received a temporary exception from the oil embargo. Deliveries to European countries, once the largest market for Russia, have fallen to zero, although a few weeks ago some of the flows were directed to storage facilities in the Netherlands.
Deliveries to Bulgaria dropped to around 146,000 barrels per day after a brief fluctuation, while exports to Turkey also declined over the week, partly due to verification of insurance documents following the imposition of sanctions on tankers passing through Turkish ports. The agency estimates the current level of deliveries to the republic at 136,000 barrels per day. Shipments to Asia (China, India and tankers bound for Asia but not specified) have also declined slightly, totaling about 2.4 million barrels per day.
Weekly oil export earnings fell 54%, or $77 million, to $66 million. Monthly average weekly earnings fell $11 million to $112 million. , which in December is $5.91. However, in January it will fall even lower (by 61%) and amount to $2.28, the minimum since the crisis year of 2020. The January decrease in the export duty will be partially offset by a tax maneuver in the oil industry, according to which the shortfall in budget revenues from the export duty will be offset by an increase in the mineral extraction tax (MET). It is planned to complete the maneuver by 2024.
The decline in oil exports has already had a negative impact on the ruble exchange rate, which has fallen by more than 6 rubles against the US dollar in just three days of trading. Analysts admit that the decline will not stop there, however, for Russian exporters and the Ministry of Finance, this is a positive factor, since with such a course it will be much easier to reduce the budget and pay off domestic Russian obligations.