IEA: Russian exports at risk from new sanctions
Key Highlights
- Russian crude exports increased by 20,000 b/d month-over-month in July, reaching 4.6 million b/d, with revenues up 7% but still below last year's levels.
- The EU implemented a new automatic price cap mechanism set at $47.60/bbl starting September 2025, tracking global prices and adjusting every 6 months.
- Sanctions targeted Russian vessels, entities, and the Nayara refinery, disrupting trade flows and increasing freight costs.
- Urals crude prices remained below the $60/bbl cap, with discounts to North Sea Dated narrowing but widening again after new sanctions.
- US tariffs on Indian imports of Russian oil and refined products threaten further market disruptions, with potential additional tariffs if Ukraine ceasefire talks fail.
According to data from the International Energy Agency (IEA), Russian crude exports rose by 20,000 b/d m-o-m in July to 4.6 million b/d, 80,000 b/d higher than in July 2024. Product exports increased by 60,000 m-o-m b/d but were still 80,000 b/d lower than the previous year. The rise in oil export revenues was more significant, climbing 7% m-o-m due to higher prices and the additional day in July compared to June. Overall revenues grew by $900 million m-o-m to $14.3 billion, yet this figure remains $2.1 billion lower than the same period last year, marking the lowest revenue for July since 2021.
Throughout July, Russian Urals crude prices stayed below the $60/bbl price cap, although the discount to North Sea Dated crude narrowed by $0.60 to $0.80/bbl, settling at around $11.90/bbl—one of the tightest margins since sanctions were initiated.
Meanwhile, Eastern Siberia–Pacific Ocean (ESPO) crude prices rose faster than Urals, boosted by the strength of the market East of Suez, and exceeded the price cap again in July. Its discount to North Sea Dated narrowed by $1.70/bbl over the month. Urals discounts versus Dubai for deliveries on the west coast of India hit near parity in June, before easing in July. Strong sour crude demand sustained Urals values but discounts widened sharply in early August after new sanctions were announced.
New sanctions
On Jul. 18, the European Union (EU) approved its eighteenth set of measures targeting Russia. This package notably adjusted the crude price cap for seaborne Russian exports to track global crude prices and introduces an automatic mechanism that modifies the cap to ensure it remains effective.
The new cap will come into effect on Sep.3 at $47.60/bbl, compared with $60/bbl currently. The Commission will recalculate the price cap as 15% below the average market price of Russian crude oil over a period of 22 weeks commencing on Jul.15, 2025, and subsequently every 6 months. If the market price during the reference period changes less than 5%, the cap remains unchanged. A wind-down period allows compliant contracts concluded before July 20, 2025, to be fulfilled by Oct. 18, 2025. The UK joined the revised cap.
With effect from Jan. 21, 2026, the EU prohibited EU operators from purchasing, importing or transferring petroleum products derived from Russian crude oil refined in non-EU non-partner countries that are net crude importers in the year prior to the imports. Importers will have to provide proof of origin for the crude used to produce the refined product.
The ban aims to halt any EU access to Russian oil. It prohibits providing direct or indirect technical assistance, brokering services, financing or financial assistance, as well as insurance and re-insurance. The Commission is finalizing the regulation’s details, including the treatment of Russian feedstocks, and will publish guidance on its implementation.
The EU also sanctioned in July a further 105 vessels (raising the fleet of EU sanctioned shadow tankers to 444), as well as 55 entities and individuals including Russian and international companies managing shadow fleet vessels, traders of Russian crude oil and the Nayara refinery in India in which Rosneft holds a 49% stake. Additional measures were imposed on Belarus, broadly mirroring those against Russia. Finally, the changes removed the existing exemption for imports of Russian crude into Czechia, which had already halted Russian crude imports in April. Following these sanctions, the UK also imposed its own on 135 tankers.
While Nayara’s 400,000 b/d refinery at Vadinar exported less than 20,000 b/d of oil products to Europe in 2024, the EU sanctions have had an immediate impact on operations. Nayara had cut run rates from 103% in first-half 2025 to 80-85% in late July and to 60-70% in early August due to difficulties in transferring products to the domestic market rather than for exports. The company does not have enough service stations, storage capacity or trucks to sell more product domestically.
The disruptions have affected buyers in the Middle East, who account for 40% of Nayara's product exports. Additionally, the new sanctions on tankers have reduced the availability of ships, increased freight costs, and put pressure on the FOB prices for Russian crude, even as some Indian refiners are reportedly reducing their purchases.
On Aug. 6, President Donald Trump released an executive order announcing an additional 25% tariff on US imports from India (added to the 25% tariffs in application from Aug. 7), possibly pushing total tariffs to 50%. This is a penalty for India’s purchases of Russian oil.
Pres. Trump has threatened other countries with similar sanctions, hoping to push the Kremlin into a ceasefire deal with Ukraine by his deadline of Aug. 8. But as of that date, Russia had agreed to a meeting between Putin and Trump, delaying the new US tariffs. Should no ceasefire be agreed, the additional tariffs would take effect on Aug. 27.