Russian oil exports fall in February after EU embargo: IEA

On February 5, EU countries imposed price caps on Russian refined oil products to limit Moscow's funds for its invasion of Ukraine. (Representative Image: Reuters)

Russian oil exports fell in February on account of the European Union (EU) embargo imposed on the exports of refined oil products by Russia, said International Energy Agency.

According to a report by IEA, oil exports by Russia fell by 500,000 barrels per day to 7.5 million bpd in February as the EU embargo kicked in on February 5.

“Shipments to the EU fell by 800 kb/d to 600 kb/d, compared with more than 4 mb/d at the start of 2022. Sailings to China and India also fell, while cargoes without a destination surged by 600 kb/d to 800 kb/d. Export revenues plunged another $2.7 bn to $11.6 bn, down 42% on a year-ago,” the report stated.

On February 5, EU countries imposed price caps on Russian refined oil products to limit Moscow's funds for its invasion of Ukraine. EU imposed a price cap of $100 a barrel on premium Russian oil products such as diesel and $45 a barrel on discounted products such as fuel oil and naphtha.

Market dynamics

The IEA report highlighted that there is a supply surplus in the market due to “lacklustre demand” and said oil stocks have built up to levels not seen in 18 months.

The report said that though the Russian oil production remained near pre-war levels in February, the country’s exports to world markets fell by more than 500 thousand bpd to 7.5 million bpd.

“Shipments to the EU plunged by 760 kb/d to just 580 kb/d. Over the past year, 4.5 mb/d of Russian oil previously going to the EU, North America and OECD Asia Oceania has had to find alternative outlets,” the report stated.

Russia has diverted its oil supply to Asian countries, mainly India and China, since the beginning of the war at discounted prices. In February, Russia accounted for around 40 percent of India’s crude imports and 70 percent of Russia’s crude exports were taken by India and China, the report stated.

Russian product exports to the EU and its G7 allies slumped by nearly 2 million bpd versus pre-war levels in February while during the same time, exports to Asia grew by less than 300 thousand bpd.

Russia’s revenue

According to IEA, Russia’s revenue from oil exports fell in February compared to the previous month.

“It remains to be seen if there will be sufficient appetite for Russian oil products now that the price cap is in place or if its production will start to fall under the weight of sanctions. Revenues are already dwindling,” the report said.

Russia’s estimated oil export revenues fell to $11.6 billion in February, a $2.7 billion decline from January when volumes were significantly higher, and nearly half pre-war levels, said IEA.

Moscow has signalled it would cut output by 500 thousand bpd for March, claimed IEA.