Using a detailed, transaction-level dataset on Russia’s energy exports in the first quarter of 2023, the paper examines how sanctions imposed by the European Union (EU), the G7, and other allies have affected Russia’s trade in crude oil and refined products. The authors pay special attention to the dual policy measures introduced at the end of 2022: the EU ban on seaborne Russian oil and the complementary G7 price cap. Their central question is whether these constraints have simultaneously maintained global oil supply stability and curbed the Kremlin’s revenue streams.
The analysis confirms a marked shift in Russia’s export markets and pricing structure. Whereas Europe once dominated as Russia’s primary buyer of crude, its imports have plummeted. India and China emerged as the biggest new customers of Russian oil, now accounting for the bulk of Moscow’s exports. While rerouting to Asia has largely prevented the feared surge in global oil prices, Russia’s overall export earnings and fiscal inflows from energy have fallen significantly.
One finding is that Russia’s Baltic and Black Sea crude shipments now sell at a deep discount, sometimes exceeding 25 dollars per barrel below global benchmarks. This reflects the abrupt exit of European customers and the increased bargaining power of alternative buyers. By contrast, the Pacific Ocean export channel—historically aimed at China—displays narrower discounts, indicating a more stable customer base and limited unoccupied transport capacity.
Beyond shifts in volumes and buyers, the paper uncovers considerable discrepancies among different oil products. Diesel exports, for instance, still fetch a higher price relative to some of Russia’s heavier fuel oils, partly owing to strong global diesel demand. Yet as the European ban on refined products began in early 2023, the authors note rising shipments to Turkey and other emerging re-export hubs, suggesting attempts to maintain flows of Russian oil products into the global market.
Crucially, the data also reveal potential breaches of the price cap regime. The authors find that large volumes are still traded above the 60-dollar threshold, especially via Russia’s Pacific ports. Some cargoes rely on European or G7-owned or -insured vessels, which in principle should be disallowed for deals above the cap. Thus, while the strategy of keeping Russian oil in circulation while reducing Russian oil revenues has had some successes, illustrated by falling Russian energy revenue, stepped-up enforcement is needed to address gaps in compliance.
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