In November 2023, Russian 🛢️ export revenues declined to $15.2 bn

Russian seaborne oil exports volumes decreased by ~4% driven by an 8% crude exports decline (MoM) in November 2023. The total Russian oil export revenues declined by $3.2 bn to $15.2 bn, according to the December issue of ‘Russian Oil Tracker’ by KSE Institute. Fundamentally, this reveals that the sanctions regime works, but improvements are needed.

In November 2023, Russian reliance on Western maritime services remained stable last month, with 26% of crude and 57% of oil products shipped with P&I Club insurance coverage. Notably, P&I Club coverage for crude oil and oil products varied by port: 55% from Arctic Ocean ports, 47% from the Baltic Sea, 44% from the Black Sea, and 13% from Pacific Ocean ports had insurance. 

For other shipments, Russia continues to extensively utilize the shadow fleet, posing significant environmental risks for the EU. KSE Institute estimates that in November, 179 loaded Russian shadow fleet tankers left Russian ports, with 70% of them being built more than 15 years ago. Interestingly, the top five flags of Russian shadow fleet vessels are Panama, Liberia, Gabon, Cook Islands and Azerbaijan.

As for oil export destinations, India remains the top buyer of Russian seaborne crude, despite a 22% decrease, while Turkey increased crude oil imports by 34%. Specifically, Russian crude exports to Turkey surged from 158 kb/d in August to 433 kb/d in November 2023. However, a concerning trend is that 71% of crude shipped to Turkey in November lacked P&I insurance, compared to 0% from February to May 2023.

Moreover, Turkey leads in Russian oil product imports, with total imports of 437 kb/d in November. Similarly, Russia still heavily relies on Greek companies for shipping oil products, although Greece has scaled back the transportation of Russian crude oil to avoid sanctions. 

This strong demand for Russian oil exports is fueled by significant price discounts. Average Urals FOB Baltic and Black Sea prices dropped by over $10/bbl to $67/bbl and $69/bbl, while ESPO FOB decreased by $6/bbl to $78/bbl. However, Urals faced a $2/bbl widening discount (MoM) after OFAC imposed its first blocking sanctions on two vessels and owners, and the US Treasury warned shipping companies for potentially breaching G7/EU price caps in November. In contrast, ESPO’s discount narrowed by almost $2/bbl (MoM).

KSE Institute now projects Russian oil revenues at $182 billion in 2023, up from the previous estimate of $153 billion in July. Under the base case with current oil price caps and stronger sanctions enforcement, revenues are expected to contract to $145 billion and $139 billion in 2024 and 2025. Lowering the price cap to $50/bbl discount to forecast Brent prices would result in revenues falling to $69 billion and $59 billion in 2024 and 2025. However, weak sanctions enforcement could lead to an increase in Russian oil revenues, reaching $189 billion and $183 billion in 2024 and 2025 respectively.

Full Russian Oil Tracker for December 2023 by KSE Institute is available here.