Russia’s fossil fuel export revenues fell to their lowest level since the start of the full-scale invasion of Ukraine in October. Earnings from exports to the EU dipped below pre-invasion levels, on a year-on-year basis, for the first time, per CREA estimates. The sharp increase in fossil fuel prices caused by Russia’s gas blackmail and other disruptions due to the war has buoyed the country’s revenue until now, although earnings have been falling from the highs reached in March.
Estimated total revenue in October was EUR 21 billion, of which EUR 7.5 billion from exports to the EU, the lowest share on record. Total revenue fell 7% month-on-month, with falls across all commodities except LNG, which increased an estimated 9% month-on-month. Revenue from exports to the EU fell by 14%, with the largest reduction in crude oil (19%).
Key findings
- In October, Russia’s revenues fell to their lowest level since the start of the full-scale invasion of Ukraine. Earnings from exports to the EU dipped below 2021 levels for the first time, on a year-on-year basis, per CREA estimates. The sharp increase in fossil fuel prices caused by Russia’s gas blackmail and other disruptions due to the war have buoyed the country’s revenue until now, although earnings have been falling month-on-month since March.
- Oil shipments out of Russia are falling and oil is building up in tankers ahead of the EU’s ban on seaborne crude oil and expected oil price cap becoming effective on 5 December. The drop is particularly pronounced in shipments out of Russia’s Baltic Sea ports which supply the European market. There is no sign of a last-minute flurry to secure supplies from Russia.
- Easing fossil fuel demand in Europe and uncertainty around the specifics of the oil price cap are likely contributing to softening exports and export prices.
- A new route for Russian oil to the EU is emerging through Türkiye, where increasing amounts of Russian crude oil are refined, while the country increases exports of refined oil products to the EU and the US. The EU ban on imports of refined oil products from Russia only becomes effective on 5 February.
- Setting price caps on all Russian fossil fuels imported into the EU or carried aboard European-owned or insured ships would have cut Russia’s export income by an estimated 23% (EUR 20 billion) in July–October.
Even after the decline, the EU remained the largest importer of Russian oil, pipeline gas and LNG, ahead of China, showing that the elimination of EU demand will have a strong impact on Russia’s exports.
The analysis also showed that oil shipments out of Russia are falling and oil is building up in tankers ahead of the EU’s ban on seaborne crude oil and expected oil price cap becoming effective on 5 December. The drop is particularly pronounced in shipments out of Russia’s Baltic Sea ports which supply to the European market.
Further, a new route for Russian oil to the EU is emerging through Türkiye, a growing destination for Russian crude oil, while the country increases exports of refined oil products to the EU and the US. The EU ban on imports of refined oil products from Russia only becomes effective on 5 February.
Turkish refiners are therefore providing an outlet for Russia’s oil exports, by refining products for markets that are either not willing to import Russian crude oil directly or don’t have the refining capacity to process it. As the EU bans crude oil imports from Russia on 5 December, this loophole could become important.