Despite an embargo, Russian oil exports are booming, funneling billions into Moscow’s war machine while undermining efforts to hamper Putin’s invasion of Ukraine.
Article by: Svitlana Romanko, Iryna Ptashnyk
Russia is now selling more oil products than before Western governments imposed sanctions on the Kremlin to punish it for invading Ukraine in February 2022.
Worse, Western countries that banned Russian oil imports have contributed to this situation by importing Russian oil products from other nations that have increased imports of Russian crude.
Existing Western sanctions against Russia are too weak. They fail to stanch key revenue streams that feed the aggressor’s war chest. Russia is bypassing the international oil embargo and using cash from exports to fund the war against Ukraine.
Since launching its full-scale war against Ukraine on 24 February 2022, Russian revenue from fossil-fuel exports exceeds 400 billion euros. This colossal flow of money has made it possible for Russia to put its economy on a war footing and increase the production of weapons against Ukraine.
A new International Energy Agency report published earlier this month showed that Russia generated the most oil revenue in July in eight months—since the Group of Seven countries introduced a global price cap on Russian oil. The G7 comprises the United States, Britain, Canada, France, Germany, Italy, and Japan.
IEA’s analysis revealed that Russia has succeeded in overriding the weak and unenforced oil sanctions. Throughout July, Russian oil was sold above the G7 price cap of $60 per barrel set in December 2022.
Prices for Russian oil climbed above the cap for the first time in April, with European-owned and insured tankers continuing to move Russian oil, indicating enforcement of the price cap was ineffective. The Centre for Research on Energy and Clean Air (CREA) pointed out in May that the European Union had not maintained its plan to revise the cap every two months, which further dulled its utility. Throughout 2023, price-cap coalition countries have failed to reduce price-cap levels and enforce the policy adopted by G7.