Russia’s dominant position in the global fuel economy is paying off, after soaring prices doubled the country’s fossil fuel revenues in the last two months—even though volumes are reduced.
“The higher prices Russia now commands for its oil and gas mean its revenues, which flow almost directly to the Russian government through state-dominated companies, have risen even while sanctions and export restrictions bite,” writes the Guardian. “Russia has effectively caught the European Union in a trap where further restrictions will raise prices further, cushioning its revenues despite the best efforts of EU governments.”
Analysis by the Centre for Research on Energy and Clean Air (CREA) tracked shipping and cargo movements to estimate the revenue generated, The Guardian says. The research showed that Russia has exported fossil fuels worth €63 billion (C$84.75 billion) since it invaded Ukraine two months ago, and that the EU was “by far the largest buyer,” importing 71% of the total.
Meanwhile, the war and ensuing sanctions reduced the volume of Russian fossil exports sufficiently to tilt global supply and cause a price jump, to Russia’s benefit. CREA found that many of the world’s biggest privately-held fossils—like BP, Shell, and ExxonMobil—continue to engage in high volumes of trade with Russia, though Exxon recently said it would exit its joint ventures with Russian state fossil Gazprom to support “the internationally coordinated efforts to bring Russia’s unprovoked attack to an end.”
Germany was the largest importer among countries continuing to buy oil from Russia, followed by Italy and the Netherlands, CREA found. The €44 billion the EU has spent on fuel imports in the past two months far exceeds their 2021 monthly average of €12 billion.
CREA lead analyst Lauri Myllyvirta said the higher revenue is propping up Russian military action. He called for a faster shift off fossil fuels to disable Putin’s war machine.
“Fossil fuel exports are a key enabler of Putin’s regime, and many other rogue states,” he said. “Continued energy imports are the major gap in the sanctions imposed on Russia. Everyone who buys these fossil fuels is complicit in the horrendous violations of international law carried out by the Russian military.”