Russia oil revenues jump on exports to energy hungry Asia
19:27, 18 July 2022
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Russia’s oil exports declined in June, to their lowest since August 2021, according to the International Energy Agency (IEA).
However, Moscow’s revenues from shipments surged last month on higher prices and from sales to alternative buyers – the energy hungry markets in Asia.
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Russian oil exports fell by 250kb/d month-over-month to 7.4mb/d in July, with the decline led by crude oil. Product shipments, meanwhile, were relatively stable at 2.4mb/d.
Export revenues, however, increased by $700m month on month on higher oil prices, to $20.4bn, 40% above last year’s average, according to the IEA’s latest Oil Market Report, popular with traders and published during US Treasury Secretary Janet Yellen’s Asia visit.
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Yellen, who used her week-long trip to drum up support for a Group of Seven nations’ (G7) plan to impose a price cap on Russian oil, said she was “hopeful that China and India will see that observing a price cap would serve their own interests in lowering the price that they pay for Russian oil, they're important importers.”
“But even so, even if they don't observe the price cap, I think it's certain that many countries that import Russian oil will be affected by the insurance and financial services ban that the EU, and presumably the UK and US, will put into effect,” Yellen told reporters in Indonesia.
The G7 comprises of Canada, France, Germany, Italy, Japan, UK and US.
‘Pivot to the east’
Russia has managed to find customers for its discounted crude, more than half of which is now exported to Asia, according to the Federation’s third-largest oil producer Gazprom Neft.
"When talking about the (western) embargo that will most likely happen, then the issue arises regarding redirecting our flows to Asia,” Gazprom Neft's chief executive Alexander Dyukov told the St. Petersburg International Economic Forum (SPIEF) last month.
“And there is the question of export infrastructure, such as pipelines, storage tanks, ports, tankers, and financial calculations. The process is already underway, with over 50% of the oil already being exported to Asia, whereas 75% was shipped to Europe at the beginning of the year," Dyukov reportedly told conference delegates on 17 June.
Earlier in June, Fitch Ratings warned that a European Union (EU) agreement to ban Russian seaborn exports of oil and oil products would “redirect trade flows and keep prices high, at least in the short term”.
Sales to energy guzzling Asia stood out in May, when Russia ousted Saudi Arabia as the biggest oil supplier to China, the world’s second-largest economy.
Crude oil is the Federation’s top export, accounting for $123bn of its export revenues, data for 2019 shows. Next on the list are refined petroleum products – things like petrol and diesel – at $66.2bn, gas at $26.3bn and coal at $17.6bn.
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