Russia’s fossil fuel export volumes continued to fall in July, but revenue rose due to higher fossil gas prices

Russia’s fossil fuel exports fell by 6% in July compared with June, and 22% below their peak in March, CREA’s analysis indicates. Reductions in import volumes since the start of the invasion are costing Russia upwards of EUR 200 million per day.

However, higher prices for fossil gas meant that Russia’s export revenues likely increased in July, compared with June, despite lower export volumes. The findings emphasize the need to address the economic windfall to Russia with measures that help lower fossil fuel prices and by placing tariffs on imports from Russia.

The largest reduction in exports has taken place in pipeline gas flows, which have halved from their peak in March. This reduction is self-imposed by Gazprom and Russia, rather than due to bans enacted by buyers.

The EU’s share of fuel imports from Russia fell below 50% for the first time.

Exports to India, China and Egypt remained above pre-invasion levels, but the increases were nowhere near sufficient to offset the reductions in imports to the EU.

Crude oil exports to Egypt, India and the United Arab Emirates have surged in recent months. These countries are serving as hubs that either refine and re-export Russian oil or are importing Russian oil for their domestic market in order to export more of their own oil production. To prevent this, the EU should restrict the use of EU-flagged ships to transport oil to third countries, and ban imports of oil and oil products from refineries that purchase Russian oil.

Solutions

The most effective way to alleviate the high fossil fuel prices is with energy saving measures. Over the next few years, investment in clean energy can replace imports from Russia, but in the short term by next winter, neither clean energy or additional fossil fuel supply can make a substantial difference.

As long as fossil fuel prices stay at elevated levels, Russia will continue to earn outsize revenue. This can be addressed with tariffs or price caps that drive a wedge between international fuel prices and those paid to Russian exporters. Even a substantial tariff would not render any Russian oil or gas production unprofitable but would cut into the export profits.

To provide a near-real time view of Russia’s fossil fuel exports, CREA has launched the website https://www.russiafossiltracker.com/, which also includes the documentation of the methodology and sources for our data and analysis.