Ukraine’s ability to defend itself against the Russian invasion has surprised almost everyone outside the country, none more so, presumably, than Vladimir Putin. As for the West’s efforts to harm Russia through sanctions on its fossil fuel exports, that is a very different matter. Sanctions have not been entirely useless. According to a report by the think tank Centre for Research on Energy and Clean Air (CREA), they have led to Russia losing over €200 million (£173 million) a day relative to what it was earning at the start of the year: €880 million (£692 million) per day in May compared to €1.1 billion (£951 million) per day in January and February. But, thanks to much higher oil and gas prices caused in part by the invasion of Ukraine itself, Russia is still earning more revenue than it did last year.
Is the pain being inflicted on European industries and consumers through higher energy prices really worth it?
In the first 100 days following the invasion on 24 February, the CREA says Russia earned €93 billion (£80 billion) from its oil exports. Of that, €57 billion (£49 billion) was earned from exports to Europe. For all of Europe’s efforts to wean itself off Russian oil and gas, much of the gap left by the reduction in European fuel exports is being plugged by other countries. China has overtaken Germany as Russia’s biggest fossil fuel customer, taking €12.6 billion (£10.9 billion) worth since the invasion. According to the CREA’s report, others who have upped their imports of Russian oil include India – 18 per cent of whose crude oil imports now come from Russia, compared with one per cent before the invasion – and, somewhat surprisingly, UAE and Saudi Arabia.
Much as we might wish that the rest of the world would boycott Russia as we are trying, and failing, to do, the West has no power to prevent it exporting its oil and gas eastwards and southwards. Moreover, it is hard even to protest against other countries taking Russian oil and gas when we are still the country’s largest customer. Russia also continues to export large quantities of coal to Europe. The Netherlands is Russia’s second largest customer after Japan. The only countries which have stopped virtually all energy imports from Russia are the US (100 per cent) and Sweden (99 per cent).
That, at least, is the situation with direct imports. But here is the really depressing bit: some of the oil being exported to India seems to be finding its way back to either Europe or North America. India’s large oil-refining industry, much of the product from which is exported, is increasingly using Russian crude oil. The largest oil refinery at Jamnagar took 27 per cent of its crude oil from Russia in May. According to the report, over half of the refined oil produced there is exported. Of this, 20 per cent in May was bound for the Suez canal – suggesting that it was destined either for Europe or North America (although some could be heading for North Africa). What’s more, European and US tankers are helping to export a lot of Russian oil. In April and May, according to the CREA, 67 per cent of Russian crude oil exports were transported by US and European-owned ships.
It might be the right thing to try to boycott Russian oil and gas exports, and this has resulted in some success. But at some point we will have to start asking: is the pain being inflicted on European industries and consumers through higher energy prices really worth it? Particularly when the rest of the world, far from following Europe’s example, is actually increasing its consumption of Russian fossil fuels?
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