EIA analysis of Russia’s energy exports market
In 2021, Russia was the third-largest energy producer and energy consumer in the world
On February 24, 2022, Russia launched a full-scale invasion of Ukraine. Following the invasion, the United States enacted a range of sanctions targeting Russian trade, broad economic sectors, and specific entities.
The European Union (EU), Russia’s main market for its energy exports and source for export-based revenues, also implemented several rounds of increasingly punitive sanctions and restrictive measures in response to the February 2022 invasion. Notably, initial rounds of EU sanctions disconnected 10 leading Russian financial institutions from SWIFT and banned coal imports from Russia.
In early June 2022, the European Union (EU) passed its sixth sanctions package against Russia, which included a complete ban on all seaborne crude oil and petroleum product imports from Russia into the EU. The sixth sanctions package also banned EU-based companies from providing any maritime transport services for petroleum cargoes from Russia.
Because companies in the EU, the United Kingdom, and Norway have significant market share in the global maritime insurance and shipping industry, the sixth sanctions package prompted concerns that those sanctions could severely restrict oil flows from Russia and cause global oil prices to increase.4 As a result, in late June 2022, the Group of Seven (G7) countries announced they would explore a global price cap on crude oil and refined products from Russia. The price cap would allow all members of the G7 to impose their own maritime services ban on oil flows from Russia, unless those cargoes are sold at or below a pre-determined price. The goal for this initiative was to prevent potential oil price increases by providing a way for Russia’s oil to continue flowing on the market while limiting the amount Russia could earn for its oil exports.
In early October 2022, the EU passed its eighth sanctions package, which codified the price cap initiative, and the G7 officially agreed to an initial crude oil price cap of $60/barrel in early December 2022.5 The price cap for Russia’s crude oil came into force on December 5, 2022, and the price cap for Russia’s refined products will become effective on February 5, 2023.6
A number of international energy companies have withdrawn or curtailed their Russia-based operations as well. BP, Equinor, Shell, Eni, and ExxonMobil have initiated total divestment from Russian assets. Total Energies, OMV, and Wintershall Dea have paused new investments in Russia.
Energy flows from Russia to Europe decreased starting in February 2022, but Russia increased trade with countries where it can sell and ship, mostly to China and India.
