Sanctions and price caps hurt Russia's oil export earnings in February - IEA

Russia’s revenues from oil exports fell to $11.6 billion in February, a $2.7 billion decline from its January earnings, according to the International Energy Agency (IEA).

PHOTO: Oil barrels in the colors of the Russian flag. Getty Images

Russia's oil export revenues are "dwindling" because of price caps and the EU embargo on refined oil products that kicked in February, the Paris-based energy market agency said in its March oil market report.

Russian oil exports averaged 7.5 million b/d in February, down by 500,000 b/d from January.

“It remains to be seen if there will be sufficient appetite for Russian oil products now that the price cap is in place or if its production will start to fall under the weight of sanctions,” the IEA said.

The Group of Seven (G7) alliance - Canada, France, Germany, Italy, Japan, the UK, US and the “non-enumerated member” EU - and Australia set two price caps on Russian refined products on 5 February. A price cap of $100/bbl on products such as diesel and gasoil that trade at a premium to crude. And a cap of $45/bbl on products like fuel oil that are traded at a discount to crude. They had also previously set a price cap of $60/bbl on crude oil originating from Russia.

According to the IEA, Russia's oil exports to the EU decreased by 800,000 b/d in February, to average 600,000 b/d. That is down from more than 4 million b/d at the beginning of 2022. Russian oil shipments to China and India also decreased in February. Meanwhile, "cargoes without a destination" increased by 600,000 b/d to 800,000 b/d. Some of these cargoes could be in transit to undisclosed buyers or indicate unsold cargoes.

Russia’s oil production in February increased by 130,000 b/d from January to 9.9 million b/d. But it still fell short of its production target by 570,000 b/d, the IEA said.

According to the IEA, “world oil supply should comfortably exceed demand in the first half of the year” despite Russia's March production cut of 500,000 b/d.

Meanwhile, the energy agency has maintained its global demand forecast in March. It expects global oil demand to grow by 2 million b/d this year.

By Konica Bhatt

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