Oil & Gas

Two years into the Russia-Ukraine conflict, some countries are still hesitant to cut ties with Moscow, opting instead to benefit from discounted Russian oil and gas. In response to Russia's invasion of Ukraine, the U.S., Europe, and others have diversified their energy sources, reducing their dependence on Russian energy and implementing sanctions to weaken Russia's economy and military operations.

The decline in Russian energy export revenues over the past two years is substantial, dropping from over $65 million in March 2022 to under $36 million in July 2023. The EU's revenue from Russian exports fell from $826 million to $75 million in February 2024, and U.S. imports plummeted from $50 million to $0 over the same period, indicating a steadfast commitment to sanctions.

While some countries have shifted away from Russian energy, others, like China and India, have increased their imports. China's imports rose from $171 million in March 2022 to $267 million in February 2024, and India's increased from $5.7 million to $135 million, making them the largest importers of Russian energy, surpassing the EU. Both countries primarily import oil, followed by gas and coal. Turkey has also elevated its imports to match the EU's level.

India, despite facing criticism, insists on buying Russian energy as long as prices remain competitive. The country's reliance on oil and coal, coupled with ambitious climate pledges, underscores the challenges of transitioning to renewable energy sources without adequate foreign investment. India's oil imports from Russia have helped reduce its dependence on Middle Eastern crude.

Russia's oil and gas revenues have remained high due to China and India's substantial investments, with Russia earning $37 billion from crude sales to India in 2023 alone. China's energy import spending reached nearly $60 billion since the conflict began, benefiting from discounted prices offered by Russia. This has led to a decrease in China's energy costs by an estimated $18 billion.

Overall, while some countries have sought to reduce their reliance on Russian energy, others have deepened their energy ties with Moscow, benefiting from lower prices. This dynamic has not only impacted global energy markets but has also undermined the effectiveness of U.S. and EU sanctions, strengthening Russia's war efforts.