Russia's deep oil discounts drove revenue down $700 million last month even as its exports jumped, the IEA says

• Russia's revenue from oil exports fell by $700 million in November, according to the IEA.
• Deep discounts and falling crude prices drove down revenue despite a jump in exports, it said.

Russia's revenue from oil sales took a dive last month even as its crude exports jumped, according to the International Energy Agency (IEA).

Deep discounts and lower global crude prices drove Moscow's export revenue down by $700 million in November to $15.8 billion, the IEA said in its monthly report. That's despite an increase in daily shipments of 270,000 barrels to 8.1 million barrels, the highest level since April.

Since its invasion of Ukraine, Russia has been selling its crude at steep discounts to Asia, in particular to China and India, as it hunts for alternative buyers to replace its key European market. Now, China and India account for about two-thirds of all Russian seaborne crude exports.

As major customers, the two Asian countries are demanding even bigger discounts, and that's delivering a hit on the Kremlin's war chest. According to Bloomberg estimates, Russia is losing about $4 billion a month in energy revenues.

This comes alongside the impact of recent declines in global oil prices amid fears of a recession. China's imposition of strict zero-Covid rules have also weighed on energy markets, reducing the demand for crude from the world's second-biggest economy.

Brent crude futures, the international benchmark, have fallen more than 8% since October even after the OPEC+ decided to slash output in a bid to support prices. The drop comes after months of high prices, with the level surging past $100 a barrel in March. At last check Thursday, Brent crude traded at $82.04.

"While lower oil prices come as a welcome relief to consumers faced by surging inflation, the full impact of embargoes on Russian crude and product supplies remains to be seen," the IEA said.

G7 countries set a price cap of $60-per-barrel on Russian crude earlier in December in an effort to crimp the country's revenues, while still allowing for the flow of its oil cargoes around the world.

The cap however means Russian output will fall by 1.4 million barrels per day, according to Reuters, which cites the IEA. That could squeeze global supply and put upward pressure on prices again.

"As we move through the winter months and towards a tighter oil balance in 2Q23, another price rally cannot be ruled out," the IEA said.