August 2024 — Monthly analysis of Russian fossil fuel exports and sanctions – Centre for Research on Energy and Clean Air

By Petras Katinas, Energy Analyst; and Vaibhav Raghunandan, Europe-Russia Analyst and Research Writer

Russian export revenues from seaborne crude slide 14%, contributing to the lowest monthly revenues for the year

Key findings

In August 2024, Russia’s monthly fossil fuel export revenues dropped by 8% to EUR 636 mn per day, marking the fifth consecutive month of decline.
The EU’s five largest Russian fossil fuel importing countries paid Russia EUR 1.2 bn this month. Due to sanctions’ exemptions, Member States continue buying Russian gas and pipeline oil.
The EU accounted for 36% of Russia’s global monthly LNG exports, valued at EUR 475 mn.
37% of Russian seaborne crude oil and its products were transported by tankers subject to the oil price cap. The remainder was shipped by ‘shadow’ tankers and was not subject to the oil price cap policy.
In August, a lower price cap of USD 30 per barrel would have slashed Russian oil export revenues by 26% (EUR 3.23 bn).
Since introducing sanctions until the end of August 2024, thorough enforcement of the price cap policy would have slashed Russia’s revenues by 8% (EUR 22.3 bn). In August 2024 alone, full enforcement of the price cap would have slashed revenues by 10% (approximately EUR 1.25 bn).

Trends in total export revenue

In August 2024, Russia’s monthly fossil fuel export revenues dropped 8% to EUR 636 mn per day, marking the fifth consecutive month of decline.
Revenues from seaborne crude oil (EUR 186 mn per day) dropped 14% month-on-month. A significant reason for this drop was an 8% drop in the volume of exports.
Meanwhile, revenues from crude oil via pipeline (EUR 77 mn per day) dropped by 4% in August.
Russian revenues from seaborne oil product exports declined 7% month on month, dropping to EUR 206 mn per day.
LNG export revenues increased by 55% month-on-month to EUR 42 mn per day.
Russia benefitted from a 4% month-on-month rise in revenues from pipeline gas to EUR 73 mn per day.
Russian revenues from coal exports dropped 28% month-on-month to EUR 49 mn per day — the fifth consecutive month they’ve dropped.

Who is buying Russia’s fossil fuels?

Coal: From 5 December 2022 until the end of August 2024, China purchased 45% of all Russia’s coal exports, followed by India (18%). Turkey (10%), South Korea (10%), and Taiwan (5%) round off the top five buyers list.
Crude oil: China has bought 47% of Russia’s crude exports, followed by India (37%), the EU (6%), and Turkey (6%).
Oil products: Turkey, the largest buyer, has purchased 24% of Russia’s oil product exports, followed by China (12%) and Brazil (11%).
LNG: The EU was the largest buyer, purchasing 50% of Russia’s LNG exports, followed by China (21%) and Japan (18%).
Pipeline gas: The EU was the largest buyer, purchasing 40% of Russia’s pipeline gas, followed by China (28%) and Turkey (25%).

China was the largest buyer of Russian fossil fuels in August, accounting for 45% (EUR 6.2 bn) of Russia’s monthly export earnings from the top five importers. Crude oil comprised 61% (EUR 3.9 bn) of China’s imports from Russia.
India was the second-largest buyer of Russian fossil fuels in August, contributing 22% (EUR 3 bn) to Russia’s monthly export earnings from its top five importers. Almost 76% of India’s imports (valued at EUR 2.3 bn) comprised crude oil.
Turkey’s imports were the third highest, comprising 17% (EUR 2.3 bn) of Russia’s total export earnings from the top five importers. 51% of Turkey’s imports from Russia were oil products and 24% comprised pipeline gas. At the same time, Turkey exported 1 mn tonnes of oil products to the EU in August, 49% of which came from Ceyhan, Marmara Ereğlisi, and Mersin ports. CREA and CSD’s earlier investigation suggests that European entities may have previously imported either mixed or simply directly re-exported Russian oil products from oil storage terminals in these Turkish ports.
The EU was the fourth largest buyer of Russian fossil fuels in August, their imports accounting for 13% (EUR 1.7 bn) of the top five purchasers. Pipeline gas comprised the largest share of the EU’s purchases of Russia’s fossil fuels (54%) followed by LNG (25%).
Brazil bought EUR 490 mn of Russian fossil fuels in August, consisting almost entirely of oil products.

In August, the top five largest Russian fossil fuel importing countries in the EU paid Russia a total of EUR 1.2 bn for their imports. The EU has granted an exemption for Russian crude oil imported through the southern branch of the Druzhba pipeline to Hungary, Slovakia, and the Czech Republic. Russian pipeline gas and liquified natural gas (LNG) also remain unsanctioned.
Hungary was the largest importer of Russian fossil fuels within the EU, importing fossil fuels worth EUR 369 mn. Their August imports included crude oil via pipeline valued at EUR 155 mn and gas valued at EUR 214 mn.
France, the second-largest buyer within the EU, exclusively imported LNG worth EUR 219 mn.
Slovakia was the third-largest importer of Russian fossil fuels within the EU, importing pipeline oil and gas worth EUR 61 mn and EUR 130 mn, respectively.
Austria exclusively imported pipeline gas worth EUR 177 mn.
Italy, the fifth-largest buyer within the EU, imported Russian pipeline gas valued at EUR 174 mn.

Despite reduced consumption and full underground gas storage, Russian LNG imports to Spain increased their market share during the first eight months of 2024, even amid a seasonal decline. Russian LNG made up 34% of Spain’s total imports, up from 28% in 2023, despite a slight decrease in import volumes by 6.15%, from 4.64 to 4.35 billion cubic meters (bcm). Spain’s payments to Russia amounted to EUR 1.4 bn during this period.

How are oil prices changing?

In August, the average Urals spot price remained at the same level as in July but significantly above the crude oil price cap, trading at USD 67.61 per barrel.
The East Siberia Pacific Ocean (ESPO) prices and Sokol blends of Russian crude oil, primarily associated with sales to Asian markets, decreased by 6% and 5%, respectively.

In August, the discount on Urals grade crude oil narrowed by 23% month-on-month and was traded at an average discount of USD 4.25 per barrel compared to Brent crude oil.
The discounts on the ESPO grade and Sokol blends remained relatively stable and modest at USD 5.69 per barrel and USD 6.32 per barrel, respectively.
Throughout this period, vessels owned or insured by the G7+ countries continued to load Russian oil in all Russian port regions where average exported crude oil prices remained above the price cap level. These cases call for further investigation by enforcement agencies for breaches of sanctions.

Growth of ‘shadow’ tankers reduces G7+ shipping industry’s leverage over Russia

In August 2024, 37% of Russian seaborne crude oil and its products were transported by tankers subject to the oil price cap. The remainder was shipped by ‘shadow’ tankers and was not subject to the oil price cap policy.
83% of the total volume of Russian seaborne crude oil was transported by ‘shadow’ tankers, while tankers owned or insured in countries implementing the price cap accounted for 19% of the total value of Russian crude exported in August.
‘Shadow’ tankers transporting oil products handled 31% of Russia’s total volume of products. The remaining volume was shipped by tankers subject to the price cap policy.

‘Shadow’ tankers pose significant risks to ecology & impact of sanctions

In August 2024, 424 vessels exported Russian crude oil and oil products, of which 227 were ‘shadow’ tankers. The oldest of these ‘shadow’ tankers was 42 years old, and 38% of these vessels were at least 20 years old.
Older ‘shadow’ tankers transporting Russian oil and petroleum products across EU Member States’ exclusive economic zones, territorial waters, or various maritime straits raise environmental and financial concerns due to their age and questionable maintenance records and insurance coverage. Their insurance coverage potentially lacks sufficient protection & indemnity (P&I) insurance to cover the cost in the event of an oil spill or catastrophe. In case of accidents, coastal countries may bear the financial brunt of the cleanup, not to mention the repercussions of damage to their marine ecology.

The cost of cleaning up and compensation resulting from an oil spill from tankers with dubious insurance could amount to over one billion euros for the coastal country’s taxpayers.

In August 2024, EUR 1 bn of Russian oil underwent ship-to-ship (STS) transfers in EU waters.
73% of these transfers were facilitated by tankers covered by G7+ insurance. STS transfers of Russian oil severely undermine sanctions by allowing Russia to evade sanctions and price caps by splitting the cargo to multiple buyers and mixing lower-priced Russian oil with non-Russian oil.
‘Shadow’ tankers, with an average age of 17, conducted environmentally dangerous ship-to-ship transfers totaling EUR 273 mn in EU waters.

How can Ukraine’s allies tighten the screws?

Russia’s fossil fuel export revenues have fallen since the sanctions were implemented, subsequently constricting 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. This includes lowering the oil price cap, increasing monitoring and enforcement of sanctions, and banning unsanctioned fossil fuels such as LNG and pipeline fuels that are legally allowed into the EU.

Lowering the oil price cap

A lower price cap of USD 30 per barrel (still well above Russia’s production cost that averages USD 15 per barrel) would have slashed Russia’s oil export revenue by 25% (EUR 66 bn) since the sanctions were imposed in December 2022 until the end of August 2024. A USD 30 per barrel price cap would have slashed Russian revenues by 26% (EUR 3.23 bn) in August alone.
Lowering the price cap would be deflationary, reducing Russia’s oil export prices and inducing more production from Russia to make up for the otherwise drop in revenue.
Since introducing sanctions until the end of August 2024, thorough enforcement of the price cap would have slashed Russia’s export revenues by 8% (EUR 22.3 bn). In August 2024 alone, full enforcement of the price cap would have slashed revenues by 10% (approximately EUR 1.25 bn).

Restrict the growth of ‘shadow’ tankers & plug the refining loophole

Russia’s reliance on tankers owned or insured in G7+ countries has fallen due to the growth of ‘shadow’ tankers. This subsequently impacts the coalition’s leverage to lower the price cap and hit Russia’s oil export revenues. Sanctioning countries must prevent Russia’s growth in ‘shadow’ tankers immune to the oil price cap policy.
Sanction-imposing countries should ban the sale of old tankers to owners registered in countries that do not implement the oil price cap policy. This would help limit the increase of ‘shadow’ tankers used to transport Russian fossil fuels, which has been observed since their full-scale invasion of Ukraine.
We are starting to see the growth in a shadow fleet for LNG tankers, which reduces sanctioning countries ability to control the transportation of Russian LNG and weakens their potential to constrict Russia’s export earnings. If G7+ countries do not ban the sale of oil and LNG tankers to owners registered in non-sanctioning countries, Russia’s access to shadow tankers to transport its fossil fuels will increase.
G7+ countries must also plug the widening refining loophole by banning the importation of oil products produced from Russian crude oil. This would enhance the impact of the sanctions by disincentivising third countries from importing large amounts of Russian crude and helping cut Russian export revenues. Banning the imports of oil products from refineries that process Russian crude oil would also lower the price of Russian oil as they would struggle to find buyers or expand their market.

Stronger enforcement & monitoring

Enforcement agencies overseeing the sanctions must take proactive measures against violating entities, including insurers registered in price cap coalition countries, shippers, and vessel owners.
Despite clear evidence of violations, agencies must do more to enforce penalties against shippers, insurers, or vessel owners, and this information must be shared widely in the public domain. Penalties against violating entities increase the perceived risk of being caught and serve as a deterrent.
Penalties for violating the price cap must be significantly harsher. Current penalties include a 90-day ban on vessels from securing maritime services after violating the price cap, a mere slap on the wrist. If found guilty of violating sanctions, vessels should be fined and banned in perpetuity.
Sanctions enforcement bodies must continue to sanction ‘shadow’ tankers as doing so hinders Russia’s ability to transport its oil above the price cap. CREA estimates that OFAC’s sanctioning of ‘shadow’ tankers has widened the discount Russia offers buyers of its oil and cut Russia’s crude oil export revenues by 5% (EUR 512 mn per month).
The lack of proper monitoring and enforcement and rising oil prices have increased Russia’s export revenues to fund its war against Ukraine.
The G7+ countries should ban STS transfers of Russian oil in G7+ waters. STS transfers undertaken by old ‘shadow’ tankers with questionable maintenance records and insurance pose environmental and financial risks to coastal states and support Russia in logistically exporting high volumes of crude oil. Coastal states should require ‘shadow’ tankers transporting Russian oil through their territorial waters to provide documentation showing adequate maritime insurance. If ‘shadow’ tankers fail to do so, they should be added to the OFAC, OFSI, and European sanctions list. This policy could limit Russia’s ability to transport its oil on ‘shadow’ tankers, exempt from complying with the oil price cap policy.

Relevant reports:

Note on methodology

Update, 10 October 2023 – We now use Kpler to estimate seaborne exports from Russia and other countries. This change increases our tracker’s estimate of exports from Russia to the world by EUR 77.8 bn (+18% increase) and the exports to the EU by EUR 12.4 bn (+2.8% increase).We have also changed how we receive protection and indemnity (P&I) insurance information about ships to obtain data from known P&I providers directly and from Equasis. This ensures we have recorded the correct start date for a ship’s insurance.Find out more details on the changes in our methodology explained in our article about the migration from automatic identification system (AIS) data providers to the Kpler dataset.Data used for this monthly report is taken as a snapshot at the end of each month. Data on trades and shipments of oil are revised and verified by the data provider through the month. We subsequently update this verified data each month to ensure accuracy. This might mean that figures for the previous month change in our updated subsequent monthly reports. For consistency we do not amend the previous month’s report, and instead treat the latest one as the most accurate data for revenues and volumes.