Espreso. Global

Russia loses €34 billion, size of its annual security budget, due to oil sanctions — CREA

5 December, 2023 Tuesday
15:37

Russia lost EUR 34 billion in export revenues after Western countries imposed a price ceiling on Russian oil and a ban on its imports by sea to the EU came into effect. This is comparable to the Russian budget's planned security expenditures for 2024

This is stated in a report by the Center for Research on Energy and Clean Air (CREA).

Oil sanctions during the year of their operation (they were introduced on December 5, 2022) reduced Russia's export revenues by 14%, according to the CREA analysis. Analysts note that the restrictions severely affected Russia's revenues in the first half of 2023 and cost EUR 180 million per day. However, by the second half of the year, Moscow managed to reduce losses to EUR 50 million per day.

The report notes that the sanctions worked mainly by lowering Russian oil prices compared to world prices, which led to a lost profit of EUR 32 billion. Another EUR 2 billion was lost by Russia due to restrictions related to the reduction in exports.

The losses from the restrictions were much less than the developers of the sanctions expected, Politico writes. The report notes that the decline in the effectiveness of sanctions is due to the inability of Western countries to enforce them. Russian oil is sold above the ceiling, and oil products made from Russian oil are legally exported to Western countries.

The total losses from the restrictions imposed by Western countries (EUR 34 billion) are comparable to the security costs included in the federal budget for 2024 (RUB 3.4 trillion). This is about a third of the budgeted defense spending (EUR 105.5 billion).

It should be noted that the purpose of the oil sanctions imposed on Russia was to deprive the Kremlin of resources to wage war in Ukraine.

And this fall, Western countries took care to restore the effectiveness of sanctions. They began to fight the "shadow fleet" that Russia uses to circumvent the restrictions.

  • On November 16, the United States imposed sanctions on three organizations linked to the Russian Federation for exporting Russian oil at inflated prices.
  • On November 23, three Greek companies stopped transporting oil from Russia under pressure from US sanctions.
  • On November 28, the media reported that Russia is facing serious problems in trading its oil in Asia due to the shortcomings of paying for it in a currency other than the US dollar, and there is no solution to these problems in sight.
  • The profits of Russia's largest oil and gas companies fell by 41% in 2023.
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