The European Union has targeted Russia’s seaborne oil exports with a new set of sanctions.

These include a ban on the maritime transport of Russian oil to third countries where the crude is priced higher than the oil price cap on Russian crude agreed earlier by the G7 group of leading economic nations.

They also include a ban on related services — adding to an earlier-approved embargo on Russian oil imports to the continent from 5 December — and an extended list of restricted items that the EU said “might contribute to the Russian Federation’s military and technological enhancement or to the development of its defence and security sector”.

The latest group of sanctions is the eighth package introduced by the EU in response to Russia’s invasion of Ukraine in February.

The G7’s cap on the Russian oil price is seen as yet another attempt by the bloc to react to Russian seaborne oil shipments that have increased this year, generating billions of dollars in revenue to the Russian government, despite the international sanctions.

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Russian seaborne oil exports have been reaching more destinations in Asia because of heavy price discounts that have more than offset the higher costs of logistics for buyers.

Russian oil production and exports grow

According to estimates by the Russia-based Association of Marine Trade Ports, exports of oil and condensate from 10 Russian ports and terminals increased to 967 million barrels between March and August this year, against 867 million barrels in the same period of 2021.

The total figure includes transit shipments of Kazakh oil via the Caspian Pipeline Consortium network, and the Russian ports of Novorossiysk in the Black Sea and Ust-Luga in the Gulf of Finland.

The increase of almost 12% in Russia’s seaborne oil exports since the invasion of Ukraine is even despite the shipping restrictions at Caspian Pipeline’s loading terminal near Novorossiysk, and the halt to oil production and exports at the ExxonMobil-led Sakhalin 1 project in Russia’s far east.

The US supermajor’s efforts to sell its 30% stake in Sakhalin 1 in response to sanctions was blocked earlier this summer by Russian President Vladimir Putin.

Exxon Neftegaz halted oil and gas production at the project in May and has not resumed, despite efforts from Moscow to replace the operator.

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Even though the Russian Energy Ministry has stopped releasing official statistics on the health of the country’s oil industry, Moscow business daily Kommersant has quoted unnamed industry sources as saying that Russia’s oil and condensate production actually increased by 3% to 10.7 million barrels per day between January and September, against the same period in 2021.

Out of that amount, oil production was estimated at 10 million bpd and condensate at 700,000 bpd, according to Kommersant.

Russian oil producers are also actively considering sending crude shipments by rail to China, it has been reported in Moscow, despite the higher transportation costs, because the country’s East Siberia-Pacific Ocean export oil pipeline to China has reached its throughput capacity for this year.

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Russia’s Finance Ministry also said authorities have lowered the oil export tax — the largest single direct levy on producers — by 15% to about $6 per barrel in September against August, to reflect the drop in global oil prices.

Russia not affected by Opec+ cut

According to initial pronouncements in Moscow, Russian oil production will not be hit by the Opec+ group’s sudden decision this week to reduce its total oil production quota by 2 million bpd.

Opec+ member Russia had an production quota for September of 11 million bpd, and the reduction of 526,000 bpd imposed on the country after the group’s meeting in Vienna earlier this week is still above its current oil output.

The Russian government had previously threatened to halt crude deliveries to buyers that backed the oil price cap, but has not commented officially on the EU’s latest sanctions, the full text of which has yet to be published in the EU Official Journal.

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