Russia keeps cashing in

June 27, 2022 7:47 am

India has been buying a lot more Russian oil this year. [Source: CNN]

The United States, the United Kingdom and Canada have announced bans on Russian oil imports.

More significantly, Europe will follow suit for Russian oil it imports by sea, a huge step given its longstanding reliance on Russia’s energy supplies.

The bloc says the ban will apply to 90% of Russian oil imports by the end of the year.

Article continues after advertisement

European customers have already pulled back. Russian oil exports to Europe dropped to 3.3 million barrels per day in May, falling by 170,000 barrels per day compared to the previous month, according to the International Energy Agency.

But an uptick in exports to Asia helped make up for a large chunk of those losses.

China — taking advantage of huge price discounts — saw its imports reach 2 million barrels per day for the first time.

India’s imports have also spiked, hovering near 900,000 barrels per day in May.

“We are actively engaged in reorienting our trade flows and foreign economic contacts towards reliable international partners, primarily the BRICS countries,” Putin said Wednesday, referring to the bloc of developing economies that also includes Brazil, India, China and South Africa.

Russia is selling barrels of its Urals crude for about $35 cheaper than the Brent global benchmark, which was last trading near $113 per barrel.

But because prices are up sharply this year due to the aftershocks of the pandemic and the war, they’ve still been making tons of money.

Russian oil export revenues increased by $1.7 billion in May to about $20 billion, according to the IEA. That’s well above the 2021 average of roughly $15 billion.
“The Russians are still getting a pretty good price,” Johnston said.

Senior US administration officials said that dealing with this dynamic will be a priority at the G7 meeting.

Speaking with reporters on Wednesday, they outlined their goal: maximizing pain on Putin’s regime, while minimizing spillover effects for the rest of the world.

“We’ll expect them to speak to, how can we take steps that further reduce Russia’s energy revenues?” one official said.

“And how do we do so in a way that stabilizes global energy markets and lessens the disruptions and pressures that we’ve seen?”