US-Banned Tankers Moved Fifth of Seaborne Russian Oil, IEA Says

The International Energy Agency (IEA) has reported that tankers banned by the United States moved approximately one-fifth of seaborne Russian oil exports in 2022. This revelation underscores the resilience of Russia's oil industry in the face of Western sanctions and the importance of non-OECD markets in absorbing Russian crude.

According to the IEA, by the end of August 2022, Russian total oil exports stood at 7.6 million barrels per day (mb/d), down just 390,000 barrels per day (b/d) from prewar levels. This indicates that despite a two million barrels per day (mb/d) drop in Russian crude and oil product shipments to Europe, the US, Japan, and Korea since the start of the year, rerouting of flows to non-OECD markets such as India, China, Turkey, and others has mitigated export losses. Consequently, approximately 80.5% of Russian seaborne oil exports were rerouted to non-OECD markets after the US import ban.

The discount on Russian oil has made it more attractive to Asian buyers. The IEA reports that Russian oil is sold at significant discounts, making it an attractive option for buyers in Asia-Pacific who are not constrained by Western restrictions. This has helped Russia maintain its oil exports despite the decline in shipments to the US and Europe.

The US import ban on Russian oil and gas, implemented in March 2022, had a significant impact on Russian oil production and exports. The ban led to a decline in exports to the US and Europe, with the UK phasing out Russian oil imports by June 2022 and the EU agreeing on an embargo on Russian crude oil imports, aiming to halt 90% of Russian crude imports by the end of 2022. However, Russia began redirecting its crude supplies to non-OECD markets, particularly in Asia, helping to mitigate export losses.

In April 2022, Russian oil output dropped by nearly 12% compared to the prewar level due to Western sanctions and corporate self-sanctioning. This decline was significant but lower than the 20% drop in June 2020 due to COVID-19 disruptions and OPEC's decision to reduce output. After May 2022, Russian oil companies reorganized their logistics and adapted to the sanctions, leading to a stabilization in oil production.

In conclusion, the US import ban on Russian oil and gas had a significant impact on Russian oil production and exports, leading to a decline in exports to the US and Europe, a rerouting of flows to Asia, and a temporary drop in Russian oil production. However, Russian oil production proved resilient, and the country managed to mitigate export losses by redirecting its crude supplies to Asia. The discount on Russian oil made it more attractive to Asian buyers, further supporting Russia's oil exports.