Russia’s invasion of Ukraine has sparked global condemnation and harsh sanctions aimed at shaking Moscow’s war chest. Yet Russia’s revenue from fossil fuels, by far its biggest export, hit record highs in the first 100 days of its war with Ukraine, driven by a windfall in oil sales amid soaring prices, according to a new analysis.
Russia earned what is most likely a record 93 billion euros in revenue from oil, gas and coal exports in the first 100 days of the country’s invasion of Ukraine, according to data analyzed by the Center for Energy and Clean Air Research, a research organization based in Helsinki, Finland. About two-thirds of that revenue, the equivalent of about $97 billion, came from oil and most of the rest from natural gas.
“The current rate of revenue is unprecedented as prices are unprecedented and export volumes are near their highest levels on record,” said Lauri Myllyvirta, an analyst who led the center’s research.
Fossil fuel exports have been a key catalyst for Russia’s military buildup. In 2021, oil and gas revenues alone accounted for 45% of Russia’s federal budget, according to the International Energy Agency. Russia’s fossil fuel export revenue exceeds what the country spends on its war in Ukraine, the research center estimated, a sobering finding as the dynamic shifts in Russia’s favor as its forces expand. are concentrating on important regional targets amid a shortage of weapons among Ukrainian soldiers.
Ukrainian officials have again called on countries and companies to completely cease trade with Russia. “We ask the world to do everything possible to cut off Putin and his war machine from all possible funding, but it is taking far too long,” said Oleg Ustenko, economic adviser to Ukrainian President Volodymyr Zelensky. Kyiv interview.
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Ukraine also tracked Russia’s exports, and Ustenko described the research center’s figures as looking conservative. Yet the underlying conclusion was the same, he said: Fossil fuels continue to fund Russia’s war. “You can stop importing Russian caviar and Russian vodka, and that’s good, but certainly not enough. You must stop importing Russian oil,” he said.
Although Russia’s fossil fuel exports have started to decline somewhat in volume, as more countries and companies avoid trade with Moscow, soaring prices have more than offset the effects of this decrease. The research found that Russia’s fossil fuel export prices were on average around 60% higher than a year ago, even taking into account that Russian oil is selling for around 30% below international market prices.
Europe, in particular, is struggling to wean itself off Russian energy, even as many countries send military aid to Ukraine. The European Union has made the most progress in reducing its natural gas imports from Russia, buying 23% less in the first 100 days of the invasion than in the same period the year before. Still, revenues for Gazprom, the Russian gas giant, remained about twice as high as a year earlier, thanks to rising gas prices, the Center for Energy and Clean Air Research found.
The European Union has also reduced its imports of Russian crude oil, which fell by 18% in May. But that decline was offset by India and the United Arab Emirates, leading to no net change in Russia’s oil export volumes, the research showed. India has become a major importer of Russian crude oil, buying 18% of the country’s exports over the 100-day period.
The United States has made a dent in Russian revenues, banning all Russian imports of fossil fuels. Yet the United States imports refined petroleum products from countries like the Netherlands and India that most likely contain Russian crude, a loophole for Russian oil to get to America.
Overall, China was the largest importer of Russian fossil fuels over the 100-day period, ahead of Germany, Italy and the Netherlands. China imported the most oil; Japan was the first buyer of Russian coal.
Stricter bans are coming. Late last month, the EU agreed to an embargo that will cover around three-quarters of Russian oil shipped to the region, although it will not be enforced for another six months. Britain has said it will also phase out imports of Russian oil by the end of the year. But Hungary, the Czech Republic and Slovakia, which receive Russian oil via pipelines, remain exempt. European and American ships also continue to transport Russian oil.
Europe is also accelerating its full transition to fossil fuels. A new EU target aims to increase the region’s share of electricity from renewable forms of energy to 63% by 2030, up from a previous target of 55%.
Janet Yellen, US Treasury Secretary, said last week that Washington was in talks with its European allies about forming a cartel that would put a cap on the price of Russian oil roughly equal to the price of production. . That would reduce Russia’s fossil fuel revenues while keeping Russian oil flowing to world markets, stabilizing prices and averting a global recession, she told the Senate Finance Committee.
Mr Ustenko, Ukraine’s economic aide, said he would welcome such a move as a temporary measure until full embargoes could be imposed. He also suggested that countries take the difference between world prices and the capped price of Russian oil and pour it into a Ukrainian reconstruction aid fund.
“Then we can cut the Russians off a lot of their funding, and almost immediately,” he said.
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