Western countries continue to obstruct Russia’s trade. On the sidelines of G7 discussions that ended in Japan on Sunday, Britain and the European Union have announced restrictions on their imports of Russian diamonds, which bring in several billion dollars to Moscow each year.
Since February 24 and the beginning of the Russian military’s invasion of Ukraine, various sanctions measures have been taken by certain major customers of Russia to prevent Russia from using them as resources to finance its military operations.
Almost fifteen months later, the war in Ukraine is still topical, while the sanctions seem to still have relatively contained consequences on the Russian economy, whose GDP has shrunk “only” by barely 2% in the first quarter, according to Rosstat. BFM Business takes stock of what Russia still sells and who are the country’s main new customers.
Crude oil massively redirected to Asia
This is one of the far-reaching sanctions against Russia: the embargo on its seaborne crude and the G7 price cap mechanism of $60 a barrel, which went into effect on December 5. A late date that allowed Moscow to export crude oil worth 142,000 million dollars in 2022, with an increase in revenue of 19,000 million dollars between March and December 2022 compared to the same period in 2021, according to data from the Center for Economic Policy. . Research (CEPR).
Therefore, the Center highlights particularly high and sustained market price levels. “Russia was able to redirect crude to other markets, including China, which continued to buy large quantities, and India, which emerged as the most important new destination,” the think tank says.
By contrast, Russia still had to accept a significant discount on crude through much of 2022 to sustain these volumes, cutting its export earnings by more than $30 billion, compared to a near-market price practice. . “During the post-embargo period, Indian buyers paid around $17 a barrel less than Europeans for Baltic Sea crude shipments,” CEPR said.
Penalties to reinforce?
The sanctions against Russian crude were followed two months later by an embargo, this time directed at exports of petroleum products, of which the country managed to obtain 83,000 million dollars in 2022, with an increase of 16,000 million euros between March and December 2022 compared to the same period in 2021. “Volumes of petroleum products have decreased due to reduced purchases by the G7 countries, in the absence of significant additional sales to other markets”, however, observe the CEPR.
This development is due to a different reorientation of exports as a result of the embargo. “Countries that now account for a dominant part of Russian crude exports, such as China, India and Turkey, play a much smaller role when it comes to petroleum products, as they all have their own developed refining sectors.” , says the group of experts. In fact, it appears that countries that have banned Russian oil products are increasingly purchasing such products through countries such as India and Turkey, which have increased their imports of Russian crude for this purpose.
The Center for Economic Policy Research believes that European countries could have hurt Russia’s wallet much more by imposing the embargo at the start of the invasion of Ukraine, which would have reduced Russian crude export earnings by $46 billion.
Noting that much of this Russian crude is still being sold today at a price above the ceiling of $60 per barrel, CEPR recommends lowering this ceiling to $35 to keep it below production costs and encourages Moscow to reduce its volumes. . It also proposes taking “an equally aggressive approach” toward petroleum products.
Sharp drop in gas exports
In 2022, almost two-thirds of the $333 billion in goods exported by Russia was from oil and gas sales, and according to CEPR, $108 billion is attributable to natural gas. “The increase in prices more than offset the sharp declines in volumes due to Russia’s decision to reduce its shipments to Europe in the second half of 2022, the think tank underlines. The figures for the full year hide the fact that that the external environment deteriorated rapidly in late 2022 and is expected to worsen further in 2023.”
Almost a year after the start of the war in Ukraine, the Russian Deputy Prime Minister in charge of Energy declared that Russian gas exports had collapsed by 25.1% in 2022.
For illustrer ce “transfert de clientèle”, the free gas vers la Chine via le gazoduc “Force de Sibérie” dans l’Extrême-Orient russe “ont increased by 48% and ont atteint a maximum historic of 15.4 milliards of m3 ” last year.
In addition, European countries continue to buy smaller amounts of liquefied natural gas (LNG), from numerous Russian reserves and transported by sea in methane tankers. Meanwhile, Russian LNG exports around the world increased by almost 8% last year, to 45.7 billion cubic meters.
Russia can always count on nickel
If hydrocarbons are the main Russian exports, they fell by 38% in January 2023 compared to January 2022 according to data from the International Energy Agency. Coal was another raw material that Moscow exported in large quantities to European countries, which soon launched a boycott to prefer to import it from South Africa, Colombia or Kazakhstan.
To compensate for these losses, Russia is betting more on the domestic market but can also count on exports of other goods, particularly in the field of raw materials. For this reason, nickel is one of the rare minerals that has seen its imports to European countries increase: a blessing, while its price skyrocketed last year.
And it is not for less, Russia is one of the main producers in the world and the European Union could least exploit the Indonesian sector to import this essential mineral for the batteries of electric vehicles. Between March and June 2022, European countries increased their imports of Russian nickel by 22% compared to the same period in 2021, the United States by 70%.
Starting in March, Russian steel, on the other hand, came under a series of European Union sanctions, which were largely targeted at Chinese producers, just like iron ore.
The complete opposite of Russian aluminum, whose European countries increased imports by 13% between March and June 2022 compared to the same period in 2021. On the other side of the Atlantic, this increase even reached 21%, but Washington recently increased imports. material entry fees.
As with its crude oil, Russia can also rely on China to continue exporting its copper. According to Chinese customs statistics, Beijing imported $852 million worth of copper and copper alloys from Russia between October and February.
New engines of growth for wood
Last February, the European Union also addressed chemicals exported by Russia, in particular by banning imports of Russian bitumen, asphalt and rubber, which account for €1.3 billion a year.
Still in the chemical department, the European Union has not yet managed to do without Russian fertilizersbe it nitrogen or potassium, even if other suppliers are now considered to be Algeria, Egypt, Qatar or even Trinidad and Tobago.
With the recently adopted 11th sanctions package, the European Union now bans nearly two-thirds of pre-war Russian imports. For its part, at the beginning of the year the United States introduced additional customs duties on certain Russian chemical and metal products, whose exports amount to 2.8 billion dollars.
In April 2022, the European embargo on raw wood, planed wood and derived products was one of the first major sanctions imposed against Moscow. This embargo has caused Russian timber exports to fall by more than 20% due to countries that have drastically reduced their imports, such as Estonia, one of Russia’s main clients in this area, which has divided its purchases in half.
But here, too, Vladimir Putin’s country could count on the emergence of a new order book with North Africa and the Middle East, which increased their wood imports by 18% between 2021 and 2022, while China still receives half of Russian exports.
And the food products?
While Russia’s wheat export figures remain vague and based on estimates, the country has taken advantage of particularly favorable weather to achieve bumper crops since the start of the war in Ukraine.
In fiscal year 2022-2023, Russia’s total cereal sales are expected to fluctuate between 53 and 54 million tons, or 20 million tons more in a year, and could even have exceeded 60 million tons without the restrictions. related to sanctions. Moscow retains many loyal customers such as Saudi Arabia, Algeria, Pakistan, Brazil, Turkey, Mexico, but also China, which has more than quadrupled its purchases in less than a decade.
Finally, Russia still benefits from the proximity of former Soviet bloc countries to export its pork, while logistical problems penalize exports to various Asian clients such as Vietnam and Hong Kong. According to figures from the Russian Union of Pig Producers, Moscow exported around 170,000 tons of pork last year compared to 210,000 tons in 2021.
Source: BFM TV
