Russian oil exports have rebounded to rates previously seen before the nation’s invasion of Ukraine despite sanctions imposed by Western countries.
G7 nations, the European Union, and Australia implemented a $60 per barrel price cap on Russian oil so that their maritime services industries, such as insurance and trade finance, can only offer their services for Russian oil sold below the benchmark. Russian oil exports in March nevertheless soared to the highest levels since April 2020 due to “surging product flows that returned to levels last seen before Russia invaded Ukraine,” according to a monthly oil market report from the International Energy Agency.
Revenues from Russian oil exports meanwhile increased $1 billion last month to reach $12.7 billion, a metric which is still 43% lower than one year ago. The Russian government depends upon revenues from the energy sector to fill its coffers.
To avoid the price cap, Russia must depend upon maritime service industries outside of the G7, which are generally more expensive and less reliable.
The effort from Western nations to limit the Russian oil market has been resisted by countries that prioritize cheaper and more reliable sources of energy. China witnessed a 43% year-over-year increase in Russian oil imports as of two months ago, according to an analysis from S&P Global, which noted that China is willing to “snap up attractively priced crudes” shunned by Western nations. Russian economic actors now use the Chinese yuan more than the dollar as the two nations increase their trade cooperation.
Japan, a member of the G7, will likewise continue to purchase crude oil from a project in the far eastern portion of Russia such that the energy-poor island nation will continue to have access to the natural gas present at the site. “We have done this with an eye toward having a stable supply of energy for Japan,” an official from the Japanese economy ministry said earlier this month in a statement.
Japan has been more hesitant than other G7 nations to express wholehearted support for Ukraine given their dependence on Russian energy. The nation provides roughly one-tenth of Japanese natural gas imports; Germany, which depended on Russia for more than half of natural gas imports before the invasion began early last year, rushed to secure other power sources as the cost of electricity soared more than tenfold last fall.
The International Energy Agency noted that a surprise oil production decrease from OPEC, an economic bloc constituting Saudi Arabia, Venezuela, and other countries with a large share of global oil production, will risk “aggravating an expected oil supply deficit” in the second half of 2023 and “boosting oil prices at a time of heightened economic uncertainty, even as industrial activity slows in the world’s largest economies.”
CLICK HERE TO GET THE DAILYWIRE+ APP
President Joe Biden has meanwhile earned criticism for approving the release of 180 million barrels from the Strategic Petroleum Reserve, a stock of emergency crude oil created to manage supply disruptions in energy markets, depleting the reservoir even as the costs to refill the stores are now elevated. He also moved last year to enable American oil production in Venezuela and reportedly asked Saudi Arabia to delay oil production cuts until after the midterm elections.