- India and China now account for two-thirds of Russian crude oil exports by sea.
- As major customers, they demand huge discounts from Russia, hitting the Kremlin’s war chest.
- Russia is losing about $4 billion a month in energy revenue, according to Bloomberg estimates.
Russian energy revenues may finally be feeling the pinch – sweeping European Union sanctions against the country’s energy exports are set to come into effect on December 5, more than nine months after the invasion of Ukraine.
As the Kremlin is about to lose its biggest customer, it is redirecting maritime exports to Asia, particularly India and China.
But it turns out to be a tough business. India and China now account for around two-thirds of all Russian crude oil exports by sea and, as major customers, demand massive discounts on their purchases, Bloomberg oil strategist Julian wrote on Sunday. Lee.
Russia’s flagship Urals crude was trading at a discount of $33.28, or about 40%, to international Brent crude at the end of last week, according to Bloomberg’s analysis of data from the Argus business information service and the Intercontinental Exchange in Europe. This is a steep decline from the $2.85 discount the Urals was trading at in 2021.
Due to the growing Urals discount, Russia is losing about $4 billion a month in energy revenue, according to calculations by Bloomberg.
This is important, especially as oil prices have fallen sharply in recent months on fears of a recession, strong Russian production and falling demand, after prices hit multi-year highs earlier in 2022.
It’s also why Washington doesn’t seem too concerned about the huge purchase of Russian oil by India and China, even if they pay prices above the ceiling imposed by the G7.
Russian oil “is going to sell at premium prices and we’re happy that India gets that windfall or Africa or China. That’s good,” U.S. Treasury Secretary Janet Yellen told Reuters. November 11th.
Brent crude futures are up around 4.3% so far this year, at around $81.30 a barrel, after climbing more than 30% in the days following the outbreak. the war in Ukraine.