There are tentative signs that Russia's diversion of crude oil to Asia from long-time European customers is faltering. Shipments to China and India are down by almost 30% from their post-invasion peak.
While it’s too early to say with confidence that self-sanctioning and pressure from the US on India, China and other buyers will have a sustained impact, there are early signs that the Asian nations may not be able to fully replace Russia’s European buyers. The trend is seen most clearly when week-to-week variations are smoothed out using rolling averages.
There’s still a long way to go before the drop in shipments hits the Kremlin's war chest hard enough to give President Vladimir Putin second thoughts about his invasion of Ukraine. Rising crude prices boost Russia’s export duty revenues and offset some of the reduction in crude flows — estimated income from crude export duty is still running above $160 million a week. Still, while that puts it up by almost 25% from immediately prior to the invasion, it’s down by a similar percentage from peak levels in April.
A US-led plan to impose a price cap on Russian oil exports is in the works, but faces significant obstacles, while President Joe Biden’s request for more oil from Saudi Arabia and its OPEC partners received a somewhat ambivalent response. Any increase will come through the OPEC+ group of oil producers, rather than unilaterally from Saudi Arabia and the United Arab Emirates. Russia’s leading role in that group means that any extra supply is likely to be modest.