August 2023 — Monthly analysis on Russian fossil fuel exports and sanctions

Key findings

  • The volume of Russia’s fossil fuel exports fell from July to August. However, Russia’s earnings continued to grow for the second consecutive month, showing an increase of +3% compared to July. This is driven by rising oil prices.
  • In August 2023, China was the largest importer of Russian fossil fuels followed by India, Turkey, the EU and Brazil. 
  • Month-on-month, imports of Russian seaborne crude oil to China increased by 6% in volume terms and revenues increased by 8%. 
  • In August, India’s monthly import volume of Russian crude oil stayed at similar levels (+1.5%) to the prior month as they experience monsoon season leading to a seasonal decline in demand. However, Russia’s revenue from crude oil exports to India surged by 23% during the same period due to rising crude oil prices and lower discounts offered to Indian buyers. 
  • In August, the EU countries imported the highest volume of fossil gas via pipeline from Russia since January 2023. Monthly Russian fossil gas imports increased by 5% compared to previous month.
  • The European and G7 shipping industry plays a significant role in transporting Russian oil. The percentage of tankers subject to the price cap in crude oil shipments from Russia remained at approximately 50% in August. However, for oil products and chemicals, the coverage of the price cap coalition tankers saw a marginal decrease of 1% in August compared to the previous month.
  • The high proportion of shipments transporting Russian oil with EU and G7 insured or owned tankers outlines how strong a set of tools the price cap coalition has to force down Russia’s oil export revenues by lowering the price cap and implementing significantly better monitoring and enforcement measures.

Trends in total revenue

  • Despite a month-on-month decrease in the volume of Russia’s fossil fuel exports (-7%), there has been an increase in monthly earnings for the second consecutive month. Russia’s earnings have experienced a monthly growth of +3% in August 2023 compared with July.
  • The largest month-on-month increase in Russia’s fossil fuel export value in August was in seaborne crude, surging EUR 28 mn per day (+16%), followed by pipeline crude, increasing EUR 11 mn per day (+10%). Minor monthly growth was observed for Russia’s natural gas pipeline with exports rising EUR 0.7 mn per day (+2%), and seaborne oil products EUR 1.8 mn per day (+0.8%). Revenues from LNG exports in August stayed at similar levels to the prior month, rising by just EUR 0.2 mn per day (+0.7%).
  • August 2023 observed a significant reduction in Russia’s fossil fuel export value of  coal, which dropped EUR 18 mn per day (-23%) compared to the previous month.
  • In August 2023, Russian oil export volumes reached their lowest level this year. This decline has been consistent since reaching its peak in March. The decrease in oil exports could be attributed to either Russia’s commitment to reduce oil exports or the necessity for significant refinery maintenance, resulting in reduced oil product exports. Additionally, the commitment to lower oil production and the ongoing tensions in the Black Sea region played a role in limiting the flow of crude oil and raising the insurance premiums of shipments.
  • Yet, due to rising prices of Russian oil for the third consecutive month, Russian revenues from seaborne oil exports have continued to rise. 
  • Russia’s oil exports increased to EUR 434 mn per day in August 2023, +7% higher than July and +11% above June levels. 
  • Crude oil export earnings in August rose by +16% or EUR 28 mn per day compared to the prior month.
  • Sales of gasoil and diesel rose EUR 5 mn per day in August compared to the prior month, equivalent to a +5% increase.
  • Russia’s export value of gasoline, kerosine and naphtha oil products rose by +7% or EUR 3 mn per day in August compared to July. 
  • Fuel oil and slurry export earnings increased by +8%, equivalent to EUR 4 mn per day in August compared to July.  
  • Finally, Russia’s export earnings from LPG and VGO fell by EUR 9 mn per day or -22% in August compared to the prior month. 

Who is buying Russia’s fossil fuels?

  • In August, the primary export markets for seaborne Russian oil were India, which received 33% of all Russian oil exports, followed by China at 21%, and Turkey at 12% by volume. 
  • Month-on-month, Russian seaborne crude oil exports to China saw a 6% increase by volume. In August, China’s total crude oil imports rose by 12%. The most significant increases in crude oil imports came from Brazil (+31%), Angola (+27%), Iraq (+21%), and Saudi Arabia (+16%). Notably, 28% of the increase in imports came from destinations that are unidentified. 
  • The increase in China’s oil imports can be attributed to refineries strategically boosting their inventory levels and intensifying processing activities in order to capitalize on more lucrative export opportunities for refined fuel products, thereby enhancing their profitability. Oil products refined out of Russian crude oil continued to be allowed into the EU, U.S., UK and Australia which have banned direct imports from Russia.
  • In August, total seaborne crude oil imports to India decreased by 7% in volume terms compared to July. Russia’s monthly decline in sales of oil to India was offset by purchases from Saudi Arabia (+58%), Kuwait (+23%), and United Arab Emirates (+4%). Indian imports of crude from Russia fell by 25%. The decline in imports from Russia is mainly related to a shrinking discount for Russian flagship grade Urals. Simultaneously, Russia’s revenues from exports to India increased by 23% in August, mainly due to increased prices on Urals grade.
  • Coal: As of August 2023, China was the largest buyer (purchasing 46% of Russia’s coal exports), followed by India (19%), and South Korea (12%), since the EU import ban on Russian crude oil was implemented (5 December 2022). 
  • Crude oil: China was the largest buyer (purchasing 47% of Russia’s crude oil exports), followed by India (32%), the EU (8%) and Turkey (3%). EU imports of crude oil since 5 December 2022 arrived via sea to Bulgaria and via pipeline for the Czech Republic, Slovakia and Hungary. Bulgaria has received an exemption to the Russian oil import ban and pipeline oil into the EU is also non-sanctioned.
  • LNG: since 5 December 2022, the EU – Spain, Belgium, France – was the largest buyer (purchasing 34% of Russia’s LNG exports), followed by China (14%) and Japan (10%). No sanctions are imposed on Russian LNG shipments to the EU.
  • LPG: Turkey was the largest buyer (purchasing 49% of Russia’s LPG exports), closely followed by the EU (43%). No sanctions are imposed by the EU on LPG imports from Russia.
  • Oil products: since the EU import ban on Russian crude oil was implemented, Turkey was the largest buyer (purchasing 24% of Russia’s oil products), followed by China (12%) and Saudi Arabia (10%). EU sanctions on seaborne Russian oil products were implemented on 5 February 2023, oil via pipeline is only partially sanctioned. 
  • Pipeline gas: The EU was the largest buyer (purchasing 42% of Russia’s pipeline gas), followed by Turkey (28%) and China (22%). No sanctions are imposed on Russian gas via pipeline into the EU.
  • In August, China stood out as the top importer of Russian fossil fuels, accounting for a substantial 44% of the total imports. India secured the second position by purchasing 24% of Russia’s fossil fuels. Turkey came in third, importing 17% of Russian fossil fuels. Meanwhile, the EU and Brazil contributed 11% and 4% to total Russian fossil fuel imports for the same period, respectively.
  • Of China’s total imports of Russian fossil fuels, crude oil comprised the biggest proportion, constituting a significant 72% share. Coal emerged as the second most imported fossil fuel from Russia, making up 12% of China’s total. In third place, there was a diverse category comprising oil products (8%), liquefied natural gas (LNG), and pipeline gas, collectively accounting for 7% of China’s total Russian fossil fuel imports.
  • In August, India ranked as the second-largest importer of fossil fuels from Russia. Crude oil accounted for 84% of India’s total fossil fuel imports from Russia. Oil products ranked in second place, with a share of 12%, while Russian coal imports represented 4% of the total.
  • Turkey remained the third-largest importer of Russian fossil fuels for the second consecutive month. In August, Turkey’s imports from Russia comprised various fossil fuel types, with a significant share of 63% attributed to oil products. Additionally, 17% of Turkey’s total imports from Russia included pipeline gas, while crude oil and coal contributed 11% and 8%, respectively. A smaller portion of 1% represented Turkey’s imports of LPG from the total imports of Russian fossil fuels.
  • In August, the EU ranked as the fourth-largest purchaser of Russian fossil fuels. EU imports of fossil fuels from Russia fell 87% in monetary terms compared to the same month last year. Out of the EU’s total Russian fossil fuel imports during this period, 48% consisted of crude oil. These oil imports to EU member states primarily occurred through two channels: the Druzhba oil pipeline supplying Central and East European countries, and via maritime routes to Bulgaria, which had been granted an exemption from import bans. Additionally, pipeline gas accounted for 25% of the EU’s total imports of Russian fossil fuels, while LNG constituted 13% of these imports. Oil products and liquefied petroleum gas (LPG) made up 13% and 1%, respectively, of the EU’s Russian fossil fuel imports in August.
  • Brazil has recently ascended to the fifth-largest purchaser of Russian fossil fuels, marking its highest volume of imports for Russian oil products since January 2023. Additionally, there was a 4% month-on-month upswing in the import of refined Russian products compared to July.
  • The largest EU importers of Russian fossil fuels in August 2023 were Hungary, Bulgaria, Czech Republic, Slovakia, and Spain. 
  • Landlocked Central and Eastern European countries received Russian natural gas via pipeline through Ukraine, and crude oil was received via the Druzhba oil pipeline. The EU has not banned Russian natural gas and Russian crude oil via the Druzhba south branch.
  • These countries predominantly imported crude oil via pipeline, gas via pipeline and LNG (mainly via shipments) from Russia. Bulgaria has an exemption to the imports embargo therefore has received shipments of crude and oil products from Russia in August. This month, Bulgaria initiated an early termination of its imports of Russian oil.
  • Моnth-on-month fossil gas exports from Russia to the EU increased by 5%. In August, the EU countries imported the highest volume of fossil gas via pipelines from Russia since January 2023.
  • In August, Hungary started importing additional fossil gas from Russia via the Turkstream pipeline. Further amounts for September are under consideration by Hungary. 
  • Spain, a country heavily reliant on fossil gas imports and the largest importer of Russian LNG, currently has no intentions of reducing LNG imports from Russia in the short term.
  • The port of Sikka in India has maintained its position as the largest port for importing Russian fossil fuels for the second consecutive month, with imports exceeding a substantial EUR 1 billion per day.
  • The other top ports importing Russian fossil fuels from Russia in August 2023 were Vadinar (India), Mersin (Turkey), Dongjiakou (China) and Yarimca-Izamit (Turkey).

How are oil prices developing?

  • Urals crude prices stayed above the oil price cap (USD 60) during August, peaking at USD 73.73 per barrel. Average Urals price increased by 10.6% month-on-month in August 2023. The average price was USD 70.69 per barrel in August, climbing from USD 63.88 per barrel in July.  
  • The prices for the East Siberia–Pacific Ocean (ESPO) and Sokol blends, which are primarily associated with Chinese and Japanese purchases, showed a small increase in August compared to levels in July. Notably, these prices consistently remained above the specified price cap level for the entire month. For Sokol blend, prices oscillated between USD 75–80 per barrel, while ESPO prices ranged from USD 76–80 per barrel. During this period, vessels owned or insured by G7+ nations continued to load Russian oil at Pacific ports. These developments provide strong evidence of violations against the price cap policy.

Russia remains highly reliant on European and G7 shipping industry

  • In August, the percentage of tankers subject to the oil price cap that transported crude oil from Russia remained consistent with the previous month, at around 50%. “Shadow” tankers transported the remaining portion of Russia’s crude oil volumes. For tankers transporting oil products and chemicals, the coverage of the price cap coalition stayed at very similar levels in August (64%) compared to July (65%). Conversely, 36% of these products were transported by “shadow” tankers in August. 
  • The share of tankers using the price cap countries’ insured or owned vessels to transport fossil fuels from Russia’s Baltic and Black Sea ports is much higher than in Pacific ports. In August, 24% of total Russian crude oil exports were moved by tankers insured or owned by price cap implementing countries to lift Russian oil at ports such as Kozmino in the Pacific region where ESPO is exported at average prices above the cap. This highlights that the policy is not working and sanctions are being evaded. 
  • The high proportion of shipments transporting Russian oil with EU/G7 insurance and/or vessels outlines how strong a set of tools the price cap coalition has to force down Russia’s oil export revenues by lowering the price cap whilst implementing significantly better monitoring and enforcement measures.

How can Ukraine’s allies tighten the screws?

  • Fossil fuel exports from Russia have fallen since sanctions were implemented, showing the impact they have had at lowering Putin’s ability to fund the war. However, much more should be done to limit Russia’s export earnings and constrict the Kremlin’s war chest such as lowering the oil price cap, increasing monitoring and enforcement of sanctions and banning unsanctioned fossil fuels such as LNG, LPG and pipeline fuels that are legally allowed into the EU. 
  • Higher oil prices for Russian grades pushed its monthly export revenues up by 7% compared to July. It is essential that sanction imposing countries tighten the monitoring and enforcement of the oil price cap policy, forcing Russian exporters to offer larger discounts on their oil exports. 
  • Additionally, measures must be taken to prevent Russia’s ability to ship its oil without relying on western owned or insured vessels and circumventing the price cap policy; actions could include banning the sale of old tankers used to transport Russian oil. 
  • Over the period starting from when sanctions on Russian oil were imposed up until the end of August 2023, Russian revenues could have been slashed by EUR 44 bn (47%), while this month alone, revenues could have been decreased by 6.79 bn (50%) by setting the cap for crude oil at USD 30 per barrel (still well above Russia’s production costs, averaging USD 15). Lowering the price cap would be deflationary, reducing Russia’s oil export prices and inducing more production from Russia to make up for the drop in revenue.
  • Even with the rising prices of Russian oil, trade with Russia continues. If full enforcement of the current cap had been implemented, it would have reduced Russia’s oil export revenue by approximately EUR 2.51 billion, which represents a 19% decrease.
  • Russian crude oil and most refined petroleum products prices exceeded the established price cap in August. Institutions overseeing sanctions implementation must undertake vigilant investigations of entities such as insurers that are registered in countries implementing the price cap policy and are facilitating the transportation of Russian oil.
  • Penalties must be implemented on entities that are caught violating sanctions to increase the perceived risk of others violating the oil price cap in pursuit of profit. Despite clear evidence of violation, there are no reports in the media of enforcement agencies implementing penalties against shippers, insurers or vessel owners.
  • Without greater monitoring and enforcement of the oil price cap policy to prevent violations of the sanctions, Russian oil prices and Putin’s export revenues used to fund the war will increase. 

Relevant reports:

The monthly update on Russian fossil fuel exports and sanctions was prepared by Isaac Levi, Europe-Russia Policy & Energy Analysis Team Lead, CREA; and Hubert Thieriot, Lead Data Scientist, CREA.
Note on methodology:
From 2023‑04‑03, our monthly analysis values are no longer seasonally corrected, which may lead to some disparities between the preceding and following reports. We have also adjusted our time frame to show totals since the start of 2023 rather than the start of the invasion. Dates featured are the date the arrival of the shipment was captured by our algorithm. 80% of arrivals for shipments are found within 4 days of the arrival port call in the specific port. For our oil products and chemicals commodity group, please note this contains a wider range of items than just those specified in the current sanctions, as of 2023‑02‑05. More information at: 

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