The European oil embargo began to take effect even before the official start: against the backdrop of impending export restrictions, Russia's income from the sale of oil by sea fell to a new low since the start of the war. This is reported by Bloomberg with reference to its own analysis of oil flows and the calculation of budget revenues.
By October 21, according to the agency, Russia's income from the sale of oil by sea fell by $12 million to $121 million a week. At the same time, the average weekly rate fell by $8 million and now stands at about $137 million, dropping to a minimum since the start of the war. Revenues fell due to a decline in exports, as well as a reduction in the export duty rate on oil to $6.06 per barrel of oil, which was the lowest level since February 2021. At the same time, the downward trend in revenues is likely to continue, as in November the export duty rate will continue to decrease and will amount to $5.83 per barrel.
Moreover, the discount for Russian oil in relation to the world grade of Brent oil began to grow again and in October was about $25.5 per barrel. Moreover, revenues will fall even more, since at the moment the total shipments of oil to the European market, on the contrary, have jumped: countries are trying to fill their storage facilities in anticipation of the oil embargo, which begins on December 5th. After this date, European companies will be prohibited not only from supplying oil to the EU, but also from providing any services, including financing and insurance.
The main directions of Russian oil supplies are now concentrated around Turkey, India and China. However, shipments to these destinations have also shown a decline in recent weeks, with the Indian destination hit the hardest. The fact is that European companies are still involved in ship insurance, and oil deliveries to India take the longest. Therefore, two local oil refineries refused to supply Russian oil, as they run the risk of not reaching their destination before the imposition of sanctions, and the companies are not ready to take on additional risks.
In total, China, India and Turkey account for about 2 million barrels per day, which is slightly lower than the peak values of June, when Russia sent 2.2 million barrels per day to these countries. In total, exports to these countries fell by 330,000 barrels per day, but this may be partly offset by tankers, whose final destination is not specified. Such tankers, according to the agency, are ready to send about 310,000 barrels of oil per day.
Total exports declined on average for four weeks, falling from the highest level in mid-August, but staying above 3 million barrels per day for the second week. In addition to the decline in the Asian direction, a decrease in demand for Russian oil was also recorded in Southern Europe – in particular, in Bulgaria and Romania.
Bloomberg and Reuters have previously reported that Russia or its affiliates are currently buying up huge numbers of tankers to create their own "shadow tanker fleet". Agencies suggest that in this way Moscow is preparing to introduce an oil price ceiling that prohibits countries from purchasing or providing export support services if the purchase price was higher than the established ceiling.
