The Russian energy sector experienced a sharp decline in its performance during the past month of November, as recent data revealed that Moscow's exports and oil revenues fell to levels not seen since the outbreak of the Russian-Ukrainian war in February 2022, under the weight of tightened Western sanctions and declining global prices.
The International Energy Agency (IEA) reported in its monthly report released today (Thursday) that Russian oil exports fell significantly by approximately 420,000 barrels per day (bpd) in November, settling at a total of 6.9 million bpd. This decline comes amidst buyer reluctance and ongoing assessments of the increasing risks associated with international sanctions imposed on Moscow, as well as logistical and financial challenges facing Russian crude shipments.
Impact of sanctions and price ceilings
The decline wasn't limited to export volumes; it extended to price value as well. The report indicated that the price of Russian Urals crude – the main export grade – fell by approximately $8.20 per barrel, reaching $43.52. This price is significantly lower than the price ceiling of $60 per barrel set by the G7 and the European Union, reflecting the success of Western mechanisms in pressuring Moscow's revenues without completely removing Russian oil from the market.
As a result of this double decline in both volume and price, Russia's monthly oil revenues plummeted to just $11 billion, a drop of $3.6 billion compared to the same period last year. This figure represents a significant blow to the Russian state budget, which relies heavily on energy revenues to finance government spending and ongoing military operations.
Global context and supply challenges
In a related context, the agency explained that Russia was the largest contributor to the decline in global oil supply during November. Russian losses coincided with supply reductions from other countries such as Venezuela, resulting in a total decrease in global supply of 610,000 barrels per day compared to October, and a significant drop of 1.5 million barrels per day from the historical peak of 109 million barrels per day recorded last September.
Economic and geopolitical dimensions
This event is particularly significant given Russia's pivotal role in the OPEC+ alliance and global energy markets. While Moscow has attempted over the past two years to redirect its exports toward Asian markets, specifically China and India, to compensate for losses in the European market, recent data indicates that stricter controls on the "shadow fleet" and payment mechanisms are beginning to bear fruit in reducing revenues, posing increasing challenges to the Russian economy as the conflict continues.
