Russia’s revenues from oil exports in October eased from a previous peak, as global crude prices dropped and the US imposed sanctions against vessels violating a Western price-cap, according to the International Energy Agency.
The nation received $18.34 billion from crude oil and petroleum-product exports last month, down $25 million from September “as lower international oil prices more than offset a narrowing discount for Russian grades,” the Paris-based agency said in its oil-market report.
“The first US Treasury sanctions imposed under the G-7 price cap contributed to slightly weaker Russian crude prices in the latter half of the month due to rising shipping costs,” it added.
Still, Russia’s monthly earnings from selling oil abroad remained near the highest level since October 2022.
Petrodollars are a key source of revenue for the Russian budget, which burdened by massive spending on the war in Ukraine and the need to maintain expenditures ahead of presidential elections in March. In recent months, oil and gas revenues have grown amid higher prices for Russian exports, narrowing the nation’s budget deficit and giving it more financial flexibility for the war.
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The Group of Seven industrialized countries have set price caps on Russian crude oil and petroleum products in an effort to limit the Kremlin’s budget revenues without harming the global oil market. Cargoes sold at a price above the thresholds aren’t eligible for services such as shipping and insurance from Western nations.
On Oct. 12, the US Treasury also imposed sanctions on two oil tankers and their registered Turkish and UAE-based owners, as both vessels used US-based service providers to transport Russian oil price above the cap.
As a result, by end-October freight costs for Russian crude shipped from the Baltic to West Coast of India rose by more than 35%, exceeding $10 per barrel and putting pressure on the price of the Kremlin’s barrels, the IEA said, citing assessments by Argus Media.
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Due to generally weaker global oil prices, the weighed average for Russian crude in October slipped to $80.66 per barrel, according to the IEA. Still, it remained well above the $60 cap imposed by the G-7, the data show.
While Brent lost $2.84 per barrel over last month, the weighed average for Russian barrels dropped by $1.13 as most cargoes of the Urals export blend loaded in the first half of October, when pricing conditions were more favorable, the IEA said.
Russia’s total exports of crude oil and petroleum products in October eased to 7.5 million barrels per day, “as higher crude oil shipments failed to offset a decline in product flows,” it added.
Russia imposed a temporary ban on most exports of diesel and gasoline in late September and lifted restrictions for seaborne flows of diesel only on Oct. 6. The ban on gasoline exports is still in force to stabilize the domestic fuel market.