Decrease in Shipping and Delivery Costs for Russian Oil Despite Sanctions

The sanctions imposed by the G7 aimed at depriving Moscow of oil revenues have failed to achieve one of their main objectives: increasing the cost of delivering Russian oil. According to data from Argus Media, the cost of delivering Russia's main Urals crude to customers in Asia from the Russian Black Sea port of Novorossiysk has dropped to its lowest level since October. Even the theoretical cost—based solely on the sanctions—has declined, according to the pricing company's estimates. This reduction in shipping and delivery costs allows Russian companies to retain a larger share of the revenues from each barrel of oil sold to customers in China and India, which have become Russia's largest markets since European buyers ceased purchasing Russian oil to pressure Moscow over the war in Ukraine. This weakness may disappoint Western policymakers, as dozens of tankers that previously operated in the Russian oil trade have ceased operations following the G7 sanctions on vessels since October.