Ever since Russia invaded Ukraine on February 24, 2022, western countries have spent a lot of time cutting ties with Russia and enacting sanctions to financially pressure them, with a particular emphasis on their fossil fuel industry. With more than a year passing since the start of this war, in this blog, we take look at the state of the Russian fossil fuel market and what has changed over this time.
Russian export revenue
Since the war began, Russia has made more than $341 billion from fossil fuel exports, with the EU being the biggest importer at just under 50% of this revenue (Exhibit 1). However, over the last year the EU has made great progress in reducing their reliance on Russia for fossil fuels. Looking year-to-date, in 2023 EU only supplies 24% of Russia’s fossil fuel revenue, and this share is continuing to decrease (Exhibit 2). Prior to the invasion, EU imports made up more than 60% of Russia’s total import revenue; today, their share is less than 20%. Despite this significant reduction, the EU remained Russia’s largest purchaser (by revenue) until February 2023, when they were finally overtaken by China. Currently they are in a dead heat with India for third.
From an overall export revenue standpoint, the invasion of Ukraine was initially a boon to Russia as commodity prices increases more than made up for decreases in exports. Fossil fuel export revenue increased from ~$840 million per day prior to the invasion, peaked at $1,200 million per day in March 2022, and lingered at over €945 million per day for much of 2022. In October, export revenue precipitously dropped before recovering slightly and has been steadily declining since, averaging ~$540 million per day in March 2023, a ~36% decline over pre-invasion revenue.
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