Kyiv School of Economics (KSE) is closely following Russia’s oil export business that has been targeted by Western sanctions and has released its latest update of the Russian Oil Tracker.

Progress has been made as Western shippers are now playing a reduced role in moving Russian oil to market. In the third quarter 2023 only 42% of Russian seaborne oil exports were shipped by tankers with Western P&I Club insurance, compared with 54% in the second quarter of 2023.

Access to Western P&I Club insurance is the key element the West has been using to try and enforce the $60 oil price sanctions. While 80% of crude oil exports from Black Sea ports were shipped with P&I insurance and enforcement is possible, only 9% of ships from Pacific Ocean ports had such coverage in September 2023. Sanction dodging in the Pacific is widespread and very hard to enforce.

Another problem is that Russia has built up a very large shadow fleet that can carry large amounts of oil: 178 loaded Russian shadow fleet tankers left Russian ports in August 2023, 72% of which were built more than 15 years ago and pose a significant risk to the environment, KSE reports.

Following the rise of oil prices and successful alternative routes, the October data suggest that more than 99% of Russian seaborne crude were sold above $60/barrel, while close to 30% was shipped with G7/EU service providers, KSE says.

The rising oil exports are bringing in more money to the Russian budget. In case of weak implementation, Russian oil revenues could approach a robust $184 bn and $202 bn in 2023 and 2024, respectively, says KSE.

KSE has been arguing bold action is needed to maintain pressure. To ensure that energy sanctions work, concrete steps need to be taken to address price cap violations and the growth of the shadow fleet.

Read more details on the oil sector in the November issue of the Russian Oil Tracker.

Read more details on the impact of sanctions on the Russian budget in the November issue of the Russian Chartbook.

Read more about what bold action can be taken to enforce oil sanctions in a paper here.

The Kyiv School of Economics (KSE) is a bne IntelliNews media partner and a leading source of economic analysis and information on Ukraine. This content originally appeared on the KSE website.