Russia has amassed huge profits from fuel despite sanctions

Russia has amassed €158 billion in revenues from fossil fuel exports in the six months of its war against Ukraine, benefiting from high prices, according to a study by an independent think tank published today, which calls for more effective sanctions.

"The surge in fossil fuel prices means that Russia's current revenues are far above those of previous years, despite reductions in exported volumes," the Finland-based Centre for research on energy and clean air (CREA) underlined in the document.

Gas prices have taken off, reaching all-time highs in Europe, while oil prices rose sharply early in the war, although they have fallen recently.

"We estimate that fossil fuel exports injected 43 billion euros into the Russian federal budget, helping to finance war crimes in Ukraine," according to the authors.

Their calculations cover the first six months of the war, from 24 February to 24 August.

The European Union is the best customer

In the period under review, CREA calculates that the main importer of Russian fossil fuels remained the European Union (against 85.1 billion euros), followed by China and Turkey.

The EU decided to impose a progressive embargo - with exceptions - on the import of Russian oil and oil products. It was also decided to put an end to purchases of Russian coal. However, Russian natural gas, on which the EU is crucially dependent, is not expected to become the subject of a similar measure for the time being.

The think tank estimates that the European embargo on Russian coal - implemented on 10 August - has paid off, as Russian exports have fallen to their lowest level since the invasion of Ukraine. "Russia failed to find other buyers," according to the authors of the study.

CREA instead believes that "stronger" rules should be put in place to prevent Russian oil from being made available in markets where it is supposedly banned. Western sanctions are easily circumvented today, according to this.

"The EU should ban the use of European ships and European ports to transport Russian oil to third countries," he argues. It also calls on the UK to ban the British insurance industry from participating in such international maritime transport.

For their part, the G7 countries decided on Friday to impose a cap on the price of Russian oil, although it is a mechanism in which its implementation involves many complications, in order to reduce the energy earnings for Moscow.

Russia will respond to the imposition of a price cap on its oil by allocating more of the volumes it produces to Asia, Russian Energy Minister Nikolai Shulginov countered today.

Source: AMNA-MPA, AFP

[This article was translated from its Greek original]