Russia’s energy revenue higher now than just before Ukraine war, U.S. official says

A view shows a local oil refinery in Omsk, Russia June 6, 2022. REUTERS/Alexey Malgavko

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WASHINGTON, June 9 (Reuters) – Russia may be getting more revenue from its fossil fuels than shortly before its invasion of Ukraine, as rising global prices offset the impact of Western efforts to restrict its sales , US energy security envoy Amos Hochstein told lawmakers. during a hearing on Thursday.

“I can’t deny it,” Hochstein told the Senate Subcommittee on Europe and Regional Security Cooperation in response to a question about whether Moscow was making more money now from its oil sales. crude oil and gas than a few months before the start of the war.

The United States and the European Union agreed to ban imports of Russian oil and imposed escalating sanctions to punish the country for its invasion of Ukraine.

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While these measures have chilled global trade in Russian fossil fuels, they have also helped trigger a spike in global oil and gas prices. Brent crude prices on Thursday were near a three-month high above $123 a barrel. Read more

Hochstein said the increase in global consumer demand for oil as a result of the COVID-19 pandemic was “far bigger, stronger than anyone predicted.”

At the same time, Russia was able to sell more cargo to other buyers, including energy-intensive China and India, offering it at a discount to oil from other origins.

Hochstein said while those Russian sales to China and India have been reduced relative to supplies from other countries, soaring world market prices mean Russia’s income is likely higher now.

The International Energy Agency said in May that Russia’s oil revenues had risen 50% year-to-date to $20 billion a month, with the EU absorbing most of its revenue. exports. The EU embargo on Russian oil, which should take full effect at the end of the year, could reduce these revenues.

India’s purchases of Russian oil more than doubled in May from the previous month to a record high above 840,000 barrels per day and will likely increase again in June, according to commodity analysts Kpler.

Hochstein said he asked Indian officials not to buy too much Russian oil and told them the United States could not ban their crude purchases because it had not imposed secondary sanctions on such sales. Hochstein said he believed there was a “cap” on the amount of oil India would buy from Russia, without providing details.

Asked about his views on imposing secondary sanctions on countries like India, Hochstein said the most important thing was to cut Russia’s revenue while mitigating the effects of soaring fuel prices. on its territory and on its allies.

Hochstein welcomed new EU sanctions aimed at insuring shipments carrying Russian oil. “We would like to see how we can use these sanctions to affect the market beyond the United States and Europe so that … no one benefits.”

While Russia supplied around 45% of the EU’s natural gas last year, Hochstein has worked to reduce this dependence by encouraging the diversion of liquefied natural gas (LNG) shipments to the EU from United States, Qatar and Australia. In the first four months of the year, US LNG shipments to Europe jumped 18% from the 2021 annual average.

Reducing demand for fossil fuels in Europe will also help reduce dependence on Russia, and the United States is working with private American companies and others to boost the use of smart thermostats in the region to increase heating and cooling efficiency, Hochstein said.

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Reporting by Timothy Gardner in Washington Writing by Richard Valdmanis Editing by Jonathan Oatis and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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