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Sanctions Impact Russian Oil Revenues Despite Steady Exports, Says IEA

Western sanctions are successfully cutting Moscow's income without restricting global oil flows. Russian oil export revenues have roughly halved in a year while oil exports remain largely unchanged, according to the International Energy Agency (IEA).

Fatih Birol, International Energy Agency Governor
Fatih Birol, International Energy Agency Governor

Russia Finds New Buyers but at a Cost

The Paris-based energy forecaster observed that after a year since the start of the war in Ukraine and Western sanctions, Russia has managed to find new customers but at a high cost to its oil export income.

Indicators of Sanctions' Impact on Russian Oil Trade

In its monthly report, the IEA highlights falling receipts from oil sales, longer voyage times for Russian tankers, lengthy transit times for Russian oil cargoes at sea, and a surge in time-consuming ship-to-ship transfers as evidence of the sanctions' impact.

Western Insurers, Financiers, and Shipping Firms Barred

The latest measures by the U.S., EU, G7 members, and Australia have barred Western insurers, financiers, and shipping firms from dealing in Russian oil cargoes unless they are sold below levels set by these countries.

Crude oil transported by bucket
Crude oil transported by bucket

Aim of Price Caps and Reduced Purchases

Western countries have largely stopped buying Russian oil and imposed price caps to reduce Moscow's income from oil sales elsewhere without preventing global oil flow, as doing so could tighten the oil market and send prices soaring.

Russian Oil Exports Drop in February

Russian oil exports dropped by 500,000 barrels to 7.5 million barrels a day in February, with the income earned on these exports estimated at $11.6 billion, roughly half the $22.1 billion earned in March 2022.

IEA's View on G7 Sanctions and Russian Oil Production

The IEA states that the G7 sanctions have curtailed Russia's export revenue without restricting global crude and product supplies. It now expects Russian oil production to stand at 10.4 million barrels a day this year, down 740,000 barrels a day from 2022.

Longer Journey Times and Ship-to-Ship Transfers

In seeking customers further afield, Russian ships face longer journey times, which have almost doubled since January 2022. Ship-to-ship transfer operations have also risen significantly, with around 180 in January, roughly double the 2021 average.

IEA's Unchanged Global Oil Demand and Supply Forecasts

The IEA maintains its forecasts for global oil demand and supply in 2023, expecting demand to grow by 2 million barrels daily, with total demand at 102 million barrels daily. Oil supplies are anticipated to struggle to keep pace with demand, potentially leading to a supply deficit in the year's second half.