Moscow’s exports of crude oil and oil products rose in March to their highest level since April 2020, jumping by 600,000 barrels a day, the International Energy Agency (IEA) said in its monthly oil report in April 14. The rise lifted Russia’s estimated revenue from oil exports to $12.7 billion last month.
While Russia’s oil revenues rebounded by $1 billion to $12.7 billion, they were still down 43 per cent compared to a year ago as Russia is forced to sell its barrels to a more limited pool of customers who can negotiate greater discounts.
The most significant are a ban on Russian seaborne crude imports into the European Union and a refined oil products ban on such as diesel into the bloc.
Following Moscow’s invasion of Ukraine in February 2022, the West has imposed a slew of sanctions against Russia including price caps on its crude oil and EU embargoes.
But Russia, the world’s second-largest exporter of crude, has found willing buyers in India and China to replace European customers.
Still, sanctions have made a significant dent in Russia’s coffers. Last week, the government said declining energy revenues had contributed to a budget deficit of 2.4 trillion rubles ($29 billion) in the first three months of this year. Its overall income plunged nearly 21 per cent compared with the same period in 2022, Reuters reported.
Russia retaliated by slashing its production by 500,000 barrels per day, and its partners at the OPEC+ oil cartel shocked the markets by announcing their own output cuts earlier this month.
The Paris-based agency said much of the increase was due to a rise in oil product exports, which returned to pre-Covid levels as they climbed by 450,000 bpd to 3.1 million bpd.
In March, Russian crude oil exports rose by 100,000 bpd to 5 million bpd with India effectively replacing China as Moscow’s main market in Asia, last month. Additionally, the IEA also said that the oil product shipments destined for the EU almost doubled between February and March to 300,000 bpd.
The IEA also said surprise cuts to crude production announced this month by the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, risked “aggravating” an expected oil shortage in the second half of 2023.
Meanwhile, demand is expected to climb by 2 million barrels per day to hit a record of almost 102 million barrels per day this year.
The cuts risk “boosting oil prices at a time of heightened economic uncertainty,” despite slowing industrial activity in the world’s biggest economies and increasing oil production in countries outside of OPEC+, the IEA said.