RUSSIA CONTINUES TO PROFIT FROM OIL SALES DESPITE SANCTIONS

Despite Washington’s tight restrictions, Russia’s oil revenues actually rose slightly. Analysts explained why sanctions have failed to have the desired effect

The large-scale US sanctions against Russia’s oil industry are unlikely to have a major impact on production volumes. Rising transportation costs and low Russian oil prices are supporting trade, Goldman Sachs analysts say.

The rising tariffs have encouraged unlicensed vessels to transport Russian oil, filling the gap left by blacklisted tankers. The widening discount on ESPO crude also creates strong incentives for price-sensitive traders and refiners to continue buying, analysts wrote.

Russia’s oil revenues have risen slightly since the Biden administration imposed sanctions earlier this month, and Western policymakers are expected to prioritize maximizing discounts over cutting volumes, according to Goldman. Overall exports remain “fairly stable.”

However, uncertainty about the impact of sanctions is “elevated, especially as some liquidation transactions are allowed until March 12,” analysts wrote in a note.