The study assesses the effects of the two main Western oil sanctions imposed on Russia after its full-scale invasion of Ukraine: the EU import embargo and the G7 price cap. Combining data on oil prices, discounts, trade flows and transport costs with findings from previous research, the authors conclude that the EU embargo has been the more consequential measure. By forcing Russia to redirect oil from Europe to more distant buyers, particularly in Asia, it both strengthened buyers’ bargaining position and substantially increased transport costs. The price cap, meanwhile, has not primarily operated as a binding ceiling on Russian oil prices. Instead, restrictions on Western shipping and related services have effectively created a partial transport embargo, making transport capacity scarcer and more expensive and thereby reinforcing the EU embargo.
For seaborne Urals crude, the buyer discount generated by the embargo averaged $3.8 per barrel in early 2024, equivalent to about 0.16 percent of Russian GDP. Higher transport costs attributable jointly to the embargo and price cap amounted to another $13.7 per barrel, or 0.6 percent of GDP. The combined effect was therefore $17.5 per barrel, equivalent to around 0.8 percent of Russian GDP. Including Russia’s eastern ESPO crude exports raises the estimated impact to at least 0.9 percent of GDP in 2024. Cumulative losses on seaborne crude between February 2022 and May 2024 are estimated at about $61 billion. The authors stress that this is conservative because it excludes refined petroleum products, some pipeline exports and unobserved costs of sanctions evasion. They conclude that Russian oil revenues under sanctions depend principally on three factors: the world oil price, the discount demanded by buyers of Russian oil, and transport costs, each of which can potentially be influenced by Western policy.
