STOCKHOLM: Russia’s revenues from oil and gas exports dropped by nearly 40% in January as price caps and Western sanctions squeezed the proceeds from Moscow’s most lucrative export, the International Energy Agency (IEA) said on Tuesday.
The country’s oil and gas export revenues were $18.5 billion in January, 38% lower than the $30 billion Moscow received in January 2022, a month before its invasion of Ukraine, according to IEA figures shared with Reuters.
IEA executive director Fatih Birol said Western measures targeting Russian energy exports had achieved their aims of stabilising oil markets and reducing Moscow’s revenues from oil and gas exports.
“Our expectation is that this oil and gas revenue decline will be steeper in the months to come,” he said. “And even more steep in the mid-term, as a result of the lack of access to technology and investment.”
International restrictions imposed on Russia in response to the Ukraine war, including a price cap of $60 a barrel imposed by Group of Seven countries, have left Russia’s Urals crude blend being sold at a heavy discount to Brent, which was trading on Tuesday at around $84 a barrel.
The 27-country European Union also banned Russian seaborne oil imports from December, and has placed sanctions on exports to Russia of technologies needed for oil refining. As well, the United States and Britain have imposed restrictions on Russian oil imports.
Moscow relies on income from oil and gas — last year around 11.6 trillion roubles ($155 billion) — to fund its budget spending, and has been forced to start selling international reserves to cover a deficit widened by the cost of its invasion of Ukraine.
Meanwhile, Europe is racing to wean itself off Russian gas, after Moscow cut pipeline deliveries to the EU following its February 2022 invasion of Ukraine. That pushed European gas prices to record highs and left countries struggling to find alternative supplies and launch energy-saving measures.
Birol said EU countries made progress in improving energy security last year, including a rapid expansion of renewable energy and heat pumps to reduce the need for fossil fuels.
But he said risks remain, and countries needed to keep up efforts to save energy and safeguard supplies. Europe’s ability to secure enough gas could be challenged by rising demand from China, or if Russia cuts off the gas it still sends to Europe.
“We have all the reasons to be as hard-working as last year,” Birol said.
