“Bloomberg”: oil sanctions are already affecting Russia even before they take effect. Sales revenues fell to February 2022 levels

Oleksiy Yarmolenko

Oil sanctions against Russia have already begun to affect its revenues even before they officially come into force. Now the level of sales of Russian oil has fallen to February 2022 levels.

Bloomberg writes about it.

Sea deliveries of oil from Russia have already fallen to a five-week low. Supply cuts, along with the lowest tariff rates since February 2021, reduced Russiaʼs revenues from oil sales to the lowest level since the full-scale invasion of Ukraine.

Currently, three countries are actively helping the Russians to maintain the oil industry: Turkey, China and India. At least the latter has already begun to reduce the volume of oil deliveries, which should arrive after December 5. Thatʼs when the oil sanctions of the European Union will start.

Cargo from Russiaʼs Pacific Ocean ports reaches Chinese terminals in just a few days, and the journey to Turkey via the Black Sea is also short. However, shipments to India take several weeks, putting them at greater risk of sanctions violations prior to arrival. Because of this, two key Indian refineries have already suspended the purchase of Russian oil.

Flows to China, India and Turkey peaked in June at 2.2 million barrels per day. Over the past four weeks, this figure has fallen by about 330,000 barrels per day.

Meanwhile, companies and refiners are rushing to book oil storage tanks in Rotterdam in the coming months, anticipating supply cuts after EU sanctions take effect.

  • On October 6, the European Union approved the eighth package of sanctions against Russia. It contains a ban on the import of Russian products worth €7 billion and a cap on oil prices. The EU also extended sanctions against individuals and Russian companies involved in illegal “referendums” on the territory of Ukraine.
  • At the beginning of September, the USA announced that the G7 countries would set a price limit for Russian oil by December 5. Countries want to see it at the level of $40-60 per barrel, which will seriously affect Russian revenues. The US Treasury proposes to limit the price of Russian oil to $60 per barrel.