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The War and Russia’s Energy Revenue�

US-Ukraine Security Dialogue XVI

Margarita Assenova

February 29, 2024

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Russian Oil Production and Supply

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Oil Supplies to Europe

Russia was the EU’s top supplier of crude, accounting for 31% of total imports until the end of January 2022. Now they are down by over 90%.

The United States is now the biggest supplier of crude oil to the European Union, supplying about one-fifth of its oil imports.

In March 2023, the total imports of crude oil and petroleum products from Russia into the EU decreased to 1.4 million tones (Mt) compared with the average monthly figure of 15.2 Mt in the three years from 2019 to 2022 (-90%).

Russia was supplying 2.2 million barrels per day (bpd) of oil and 1.2 million bpd of oil products to Europe (IEA).

After the oil embargo, Russia can only deliver about 400,000 bpd to Europe, mostly to Hungary, Slovakia and the Czech Republic by pipeline and to Bulgaria by sea (ending tomorrow).

EU embargo on oil products is effective since February 2023.

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Oil Revenues

The discount of Russian Urals crude oil to international benchmark Brent crude has risen about 40% since the U.S. started increasing enforcement of the G7's price cap by placing sanctions on tankers suspected of carrying Russian crude priced above the $60 a barrel cap.
Urals have at times traded at a discount greater than $40/b to Dated Brent following the introduction of the price cap.
As of November 2023, Russia has lost more than $47.3 billion in income from oil exports since the price cap was introduced. This is over half of the $88.3 billion which Russia has made from exporting crude over the same period (about 11 month) the year before, according to customs data.

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Impact on Russian Economy

Russia’s current account surplus has fallen by $140 bln or 85% -- $25.2 bln in July 2023, compared to $165.4 bln in July 2022.
The central bank forecast the 2023 current account surplus at $26 billion, sharply down from last year’s $227 billion.
But the current account surplus was down to $0.6 billion in December 2023.
The Russian National Welfare Fund is already halved.

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Russian Natural Gas

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Russian natural gas supplies to Europe

Gazprom used to deliver about 160-178 billion cubic meters (bcm) of natural gas to the EU.
This was about 45 percent of total EU gas consumption in 2019.
Now, Russian gas comprises about 6 percent of total EU consumption.
The United States LNG deliveries replaced 40 percent of the Russian gas in 2023 – 63 bcm.
The US remained EU’s main LNG supplier in 2023.

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Gas Revenues

Gazprom Troubles

Gazprom’s net profit plunged by 8.5 times to stand at just $3.1 billion (296 billion Russian rubles) for the first half of 2023, down from $26 billion (2.5 trillion rubles) for the same period of 2022.
Separately, Gazprom Neft, the oil arm of Gazprom, reported in November 2023 a 43% annual slump in its second-quarter net profit amid lower sales.