Moscow is currently facing significant economic challenges as Western sanctions continue to impact its oil exports, which have plummeted to the lowest levels since December 2023. Recent data indicates that in the week from July 15 to 21, 2024, only 19.78 million barrels of Russian crude oil were exported via 27 tankers, marking a drastic decrease from previous weeks. This decline is attributed not only to Russia's compliance with OPEC production cuts but also to the increasing effectiveness of Western sanctions aimed at limiting Moscow's oil revenue, which is crucial for funding its military operations.
The European Union has extended its economic sanctions against Russia for an additional six months, citing the country's destabilizing actions in Ukraine. These sanctions, which have been in place since 2014, have expanded significantly since the onset of the war in Ukraine in February 2022. The EU has implemented 14 sanctions packages targeting various sectors, including energy and finance, and has banned the import of Russian crude oil and petroleum products, further squeezing Russia's economy.
In response to these sanctions, Russia appears to be leveraging shadow fleets to continue its oil operations. Reports suggest that Russia is preparing to organize fleets for transporting liquefied natural gas (LNG) as well, following the EU's recent sanctions against this sector. The hunt for these shadow fleets has intensified, with the U.S. imposing sanctions on over 50 vessels connected to Russian oil exports since October 2023.
- The ongoing economic strain on Russia is compounded by its reliance on oil revenues, which have historically been a backbone of its economy. The sanctions, particularly the embargo on seaborne crude oil and the price cap on Russian oil, are designed to reduce Putin's ability to fund military operations in Ukraine. The EU's decision to extend sanctions reflects a unified stance among Western nations to hold Russia accountable for its actions.
- Experts predict that the decline in oil exports will continue, potentially leading to further economic challenges for Russia. The effectiveness of sanctions against individual tankers, as opposed to larger companies, is seen as a strategic move to tighten the noose around Russia's oil trade. As the situation evolves, the global energy market may also feel the ripple effects of reduced Russian oil availability.
