Russian crude oil flows and sanctions impact
For now, Russian oil supplies remain resilient despite the price caps set by the G7 and the European Union embargo. The European Central Bank notes that these measures have had a limited effect on global oil prices, especially on the derivative markets, while signs of a marginal upward pressure may emerge as the policy framework unfolds in the coming months. The ECB’s summary of recent research highlights how the sanctions landscape has influenced price dynamics and trade routes without triggering a sharp, universal spike in prices on world markets.
Analysts at the euro area central bank explain that Russia redirected a substantial portion of its crude exports before the EU embargo and the G7 price ceiling were activated in 2022. This shift involved moving away from the European market toward Asian buyers, altering traditional trade patterns and reducing the share of shipments previously routed to Europe by sea. As a result, before sanctions were fully in force in November 2022, China and India together accounted for about seven-tenths of Russia’s oil exports, a dramatic rise from the prewar share of just under one-fifth.
Russian crude oil exports
Following the initial tightening of sanctions, Russia’s crude exports by sea dropped noticeably. Since then, volumes have begun to recover, reflecting continued diversions of crude away from sanctioning economies toward nations not subject to those measures. Although data remains incomplete, a large portion of Russian crude appears to be loaded onto tankers with destinations not disclosed publicly. In a typical month, seaborne crude shipments show a level of export activity that remains broadly in line with the late 2022 figures, indicating a persistent reshaping of the trading map rather than a rapid collapse in shipments. The comparisons to November 2022 show only modest changes in overall seaborne export volumes, underscoring how the market has absorbed and redistributed crude across corridors beyond the embargoed markets.
Meanwhile, the global oil price environment has witnessed only limited fluctuations despite the sanctions. International benchmark prices trended lower by about 9 percent from the previous December, signaling a degree of price resilience in the face of policy shocks. In European terms, the Uralic grade of Russian oil, which has traditionally been directed toward European buyers, continued to trade at a meaningful discount after the sanctions were imposed, a discount that persisted into the early weeks of the embargo. In contrast, ESPO grade oil shipments to Asia largely maintained price levels close to global benchmarks and above the ceiling price that applies to sanctioned flows.
Sanctions and world oil markets
ECB economists caution that the European diesel market remains particularly tight even as refiners in the region increase imports to cover demand. The sanctions package has tightened the supply chain for refined products, and the impact may intensify as the policy framework matures. Leaders of the sanctioning coalition have signaled an intention to keep the price cap at a level that remains at least five percent below the market price for Russian oil, a target that continues to guide expectations for future price dynamics.
At the same time, central bank analysts argue that the embargo and the price cap for refined petroleum products are still in the early stages of implementation. This early phase introduces a wide margin of uncertainty about how the rules will propagate through refining and distribution networks. As time passes, the fear is that the embargo could add additional price pressures to an already tight European diesel market. In Europe, suppliers must bid for diesel barrels from competing sources, notably the United States and the Middle East, while continuing to serve traditional customers. This competitive environment is shaping how European refiners secure flows and how prices respond in the near term, with ongoing reassessments expected as more data becomes available and policy effects crystallize. [Source: ECB analysis]