How long will Russia be able to finance its war

23 December 2022, 03:44 PM

On Russian crude oil exports from the ports of the Black Sea

After the EU made the decision to begin sanctioning Russian oil exports by sea as of December 5, 2022, we began to see something interesting happening in November: a significant decrease in the total volume of Russian maritime crude oil exports from the Black Sea of almost 1 million tons, a decrease in exports to EU countries of almost 0.5 million tons, and a de-crease in exports to other countries beyond the EU of almost 0.5 tons. That is, we saw Russia attempting unsuccessfully to replace exports to EU countries with exports to other countries.

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In November 2022, the nearly 0.5 million-ton decrease in Black Sea exports to EU countries was provided by one of 4 EU countries — Italy, which imported 538,779 fewer tons than in October, while Greece, on the other hand, increased its imports in the last month before the embargo by 29.5% compared to the previous month.

We have not been seeing the oft-reported reorientation of Russian crude oil exports to India and China from Black Sea ports. In October-November 2022, exports to India decreased each month, and exports to China from Black Sea ports halted. In November 2020, 51% of Russian crude oil exports to other countries (other than the EU) depended on two countries — India and Turkey. In October 2022, Turkey became the absolute leader in this category. India has lost its lead, with its share coming in at only 23%, while Turkey's share was 46%. But in November 2022, the increase in export volumes to Turkey turned out to be temporary, and both leading countries showed a drop in indicators.

After the June 3, 2022 decision to impose the embargo, the EU introduced a transition period lasting 6 months, from June to November. During this time, 9 EU countries and the United States imported 9.3 million tons of Russian crude oil from the Black Sea. The cost of this oil is estimated at $5.3 billion over the six months, or an average of about $0.9 billion per month, or $10-11 billion per year.

In that case, if the oil supplied from the Black Sea to EU countries remains unsold to other buyers, then Russia could go without approximately the same amount of revenue from the export of crude oil from the Black Sea — $10-11 billion per year.

Against the general background of Russian energy exports, it looks like this:

  • In 2021, Russia exported 118.5 million tons of oil through sea ports — comprising 51.54% of all its oil exports. The share of maritime exports from the Black Sea was in different years between 16 and 25% of the total volume of Russian maritime crude oil exports. The main export seaports are Novorossiysk (Black Sea), Primorsk and Ust-Luga (Baltic Sea), and Kozmino and Prigorodnoye (Pacific Ocean).
  • In 2021, Russia received $253.2 billion from energy exports, including $180.1 billion from exports of crude oil and petroleum products.
  • In 2023, Russia plans to spend about $143 billion on defense.

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