Russia’s revenue from fossil fuel exports collapsed in December, according to a new report, significantly hampering President Vladimir Putin’s ability to finance the war in Ukraine. The findings, Ukrainian officials and campaigners say, illustrate the effectiveness of targeting Russia’s oil revenue and underscore the urgent need for Western policymakers to ratchet up the financial pressure on Moscow in order to help Kyiv prevail. Russia’s revenue from fossil fuels collapsed in December.
CREA’s report said the Western measures were largely responsible for a 17% fall in Russia’s earnings from fossil fuel exports in the final month of 2022. It means that Russia — one of the world’s top oil producers and exporters — saw revenue from fossil fuel exports slump to its lowest level since Putin launched his full-scale invasion of Ukraine in late February.
“The EU’s oil ban and the oil price cap have finally kicked in and the impact is as significant as expected,” Lauri Myllyvirta, lead analyst at CREA, said in a statement.
“This shows that we have the tools to help Ukraine prevail against Russia’s aggression. It’s essential to lower the price cap to a level that denies taxable oil profits to the Kremlin, and to restrict the remaining oil and gas imports from Russia,” Myllyvirta said.
The Group of Seven, Australia, and the EU implemented a $60-per-barrel price cap on Russian oil on Dec. 5. It came alongside a move by the EU and U.K. to impose a ban on the seaborne import of Russian crude oil. Russia’s revenue from fossil fuels collapsed in December.
Together, the measures reflected by far the most significant step to curtail the fossil fuel export revenue that is funding the Kremlin’s onslaught in Ukraine.
Energy analysts had been skeptical about the impact of a price cap on Russian oil, particularly as Moscow had been able to reroute much of its European seaborne shipments to the likes of China, India, and Turkey. Russia retaliated against the Western measures late last month by banning oil sales to countries that abide by the price cap.
Kremlin spokesperson Dmitry Peskov has previously said a Western price cap on Russian oil would not impact its ability to sustain what it describes as its “special military operation” in Ukraine. Peskov also warned the measure would destabilize global energy markets, Reuters reported.
A spokesperson for Russia’s Finance Ministry was not immediately available to comment on the report’s findings.
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