Russia has sharply reduced its oil export prices, offering steep discounts on crude. Urals, the country’s flagship blend, was priced at $34.52 per barrel in Novorossiysk in December. With average production costs running between $25 and $40 per barrel, producers are operating at or near zero profit. The market outlook remains bleak. Russian firms have had to deepen discounts for Chinese buyers to move cargoes that Indian refiners now reject over sanctions risks. As markdowns widen and volumes slip under sanctions pressure and softer global demand, Russia’s fossil fuel revenue fell to 489 million euros ($573 million) per day in November, its lowest level since the full-scale invasion of Ukraine.
The stakes for Moscow are high. Energy exports, especially oil and petroleum products, remain central to financing both social spending and the war effort, which is why the sector was an early target of Western sanctions. Although price matters, maintaining the perception of reliability and protecting market share has become just as important for the Kremlin. Deep discounts and below-market prices on other fuels still allow Russia to place significant volumes in Asia and parts of Europe despite bans and restrictions. This has helped Moscow consolidate its exports around three key destinations: coal and oil shipments to China, petroleum products to Turkey, and continued sales of liquefied natural gas and pipeline gas to the European Union, which remains its largest customer for those fuels.
