The European Union’s (EU) ban on crude oil imports from Russia and its price cap on the country’s oil are costing Moscow about $172 million per day, a new report has found.
Those losses could rise to roughly $300 million per day (280 million euros) on Feb. 5, when the EU will be implementing further restrictions, according to the report, published by the Helsinki-based Centre for Research on Energy and Clean Air.
“The EU ban on Russian oil was an extraordinary step taken to axe the funds from Europe financing Putin’s war,” the independent research organization said in a statement.
At the same time, however, the authors described current measures as “too lenient” and called upon Western nations to “further choke off Russia’s funding for the war.”
This past June, the European Council adopted a sanctions package to prohibit the purchase, import or maritime transport of Russian crude oil by Dec. 5. These measures will expand to include other refined petroleum products on Feb. 5.
The EU and the Group of Seven countries — including the U.S. — also imposed a price cap on Russian oil last month, limiting sales to $60 per barrel.
After these measures were implemented, Russia’s December earnings plunged by 17 percent, to the lowest level since the beginning of the country’s invasion of Ukraine, the report found.
The sanctions caused a 12 percent reduction in Russia’s crude oil exports and a 23 percent drop in selling prices — amounting to a 32 percent decrease in Russia crude revenues in December, per the report.
In addition to these blocwide measures, Germany also stopped pipeline imports at the end of December, which prompted a further reduction of 5 percent, the researchers noted.
Still, other countries such as China and India have continued to import Russian oil, with Moscow’s fossil fuel exports earning the country $688 million per day, according to the report.
A drop in shipment volumes and prices for Russian crude cut revenues by $194 million per day, while Germany’s pipeline halt cost another more than $21 million, the authors acknowledged.
But Moscow was able “to claw back” more than $21 million daily by boosting refined oil exports to the EU and the rest of the world, the researchers found.
Russian Deputy Prime Minister Alexander Novak maintained Wednesday that his country’s producers have faced no problems securing export deals, regardless of Western sanctions.
“The companies are not saying they have problems as of today,” Novak said at a televised meeting led by Russian President Vladimir Putin, according to Reuters.
But the February expansion of the price cap to include refined oil products — as well as a decision by Poland to slash pipeline oil imports — is expected to reduce Russia’s income by another $129 million per day to $559 million.
Russia is one of the biggest exporters of refined petroleum exports worldwide. The country sells products such as diesel for farm machinery, fuel oil used in home and industrial heaters, and the solvent naphtha, which can be used to boost gasoline output, according to the World Economic Forum.
The Wall Street Journal reported Wednesday that the forthcoming penalties on refined products could take a significant economic toll on Moscow, with different penalties likely to apply to high-value exports like diesel and low-value products like fuel oil.
The researchers urged Western nations to consider taking additional measures to curb Russia’s revenues such as lowering the price cap on crude oil from $60 per barrel to $25 to 35 per barrel and strengthening the price cap’s enforcement by raising penalties for those who violate it.
“The EU’s oil ban and the oil price cap have finally kicked in and the impact is as significant as expected,” Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air, said in a statement.
“This shows that we have the tools to help Ukraine prevail against Russia’s aggression,” Myllyvirta added.