Summary

• In June 2023. total Russian oil exports decreased by around 600 kb/d (MoM) or by 300 kb/d (YoY). Despite all its efforts to boost its shadow fleet, Russian still heavily relies on Western maritime services as 45% of crude oil and 62% of oil products were shipped by tankers with P&I Club insurance in June 2023. The P&I Club insurance coverage varies by ports of shipment as 62% of crude oil exports from Black Sea ports were shipped by tankers with P&I Club insurance while only 12% of crude oil shipments from Pacific Ocean ports had P&I Club insurance in June 2023.

• The KSE Institute estimates Russian shadow fleet at 131 tankers in June 2023. 99 of these tankers were built more than 15 years ago. Operation of Russian shadow fleet poses huge environmental risks for the EU as decrepit tankers older than 15 years without P&I insurance navigate several European countries coastlines including Danish Straits. These shippers do not have capital to cover the clean-up costs in case of oil leaks near the EU coastline. In June 2023, the shadow fleet was responsible for exports of around 1.7 mb/d of crude oil and 0.8 mb/d of oil products.

• India and Turkey became the biggest buyer of Russian seaborne crude and oil products respectively after the coalition of advanced democracies refused to purchase Russian oil.

• Steep price discounts for both Russian crude and oil products continue supporting the strong demand for Russian oil exports. In June 2023, Urals and Arctic grades stayed at around $52-53/bbl and remained eligible for shipping with P&I insurance. In December 2022- June 2023 ESPO was shipped with Western maritime services at prices much above the price cap indicating weak policy enforcement. Although the involvement of Western companies in crude oil shipments from Pacific ports further declined in June. Both premium and discounted oil product prices remained below the price caps in June.

• Russian oil export revenues decreased by $1.5 bn to $11.8 bn in June due to lower volumes exports. According to the KSE Institute estimates, in the base case with current oil price caps and status quo of sanctions but their stronger enforcement, revenues will contract to $153 bn and $144 bn in 2023 and 2024 respectively compared to $218 bn in 2022. If the price cap is lowered to US$ 50/bbl discount to forecast Brent prices, revenues fall to just $114 bn and $64 bn in 2023 and 2024. However, in case of weak sanctions enforcement, Russian oil revenues could approach a robust $175 bn and $188 bn in 2023 and 2024 respectively.