A Bloomberg analysis of Russian energy exports found Moscow has largely successfully circumvented the Group of 7’s (G7) price cap on Russian oil exports. The Kremlin has found buyers in India and China to replace exports to Europe. Additionally, Moscow has contracted with a group of tankers willing to transport Russian oil despite potential economic penalties.
Bloomberg reports, “Russia’s net oil revenues of $11.3 billion in October accounted for 31% of the nation’s overall net budget revenue for the month, according to Bloomberg calculations that are built around Russian finance ministry data, but smooth out profit-based tax revenue.” The article continues, “That was the highest since May 2022 and exceeded any single month in the year before the invasion of Ukraine, which initially caused huge volatility to the nation’s exports.”
After Russia invaded Ukraine in February 2022, President Joe Biden announced the US and its allies would use sanctions to cripple the Russian economy and disable Moscow’s war machine. The Kremlin was able to find trading partners willing to ignore the Western sanctions, such as China, India, and Turkey.
As the economic war failed to deliver a blow to the Russian economy during the first year of the war, in December 2022, Washington and its allies in the G7 imposed a $60 per barrel price cap on Russian oil exports. However, Moscow has effectively evaded the economic penalties by shipping its oil via a fleet of tankers that operate outside of Western enforcement mechanisms.
The White House has indicated that its next step will be sanctioning the individual tankers carrying Russian oil exports. It’s unclear if this policy will have more of an impact than previous measures the Biden administration has taken.
