Russia makes a fortune from energy despite sanctions

“I can’t deny it,” Hochstein told the Senate Subcommittee on European and Regional Security Cooperation on the question of whether Russia is making more money from selling its crude oil and gas. months before the Ukraine crisis or not.

The move by the West to phase out fossil fuels from Russia has contributed to a rise in global oil and gas prices. Brent crude oil price on June 9 nearly touched the highest level in the past 3 months above 123 USD/barrel.

Oil refinery in Omsk – Russia. Photo: Reuters

Mr Hochstein said the increase in global oil demand from consumers in the post-pandemic recovery area was “much bigger, stronger than anyone anticipated”.

At the same time, Russia can sell more goods to other buyers, including major energy consumers China and India, by lowering oil prices, according to Reuters news agency.

Mr. Hochstein said that although Russian sales to China and India have been discounted relative to supplies from other countries, rising global market prices mean that Russian sales may now be higher.

The International Energy Agency said in May that Russia’s oil revenue has grown by 50% since the start of the year to $20 billion a month, with the EU accounting for the largest share of Russia’s exports. The EU’s ban on Russian oil, expected to take effect later in the year, could cut into that revenue.

According to market research firm Kpler (Belgium), the amount of Russian oil that India buys doubled in May compared with the previous months to a record high of 840,000 bpd and will continue to increase in June. When asked about imposing secondary sanctions on countries like India, Hochstein said the most important thing is to reduce Russia’s revenue while mitigating the impact of higher fuel prices. domestically and to allies.