An invasion into the Ukraine by Russian troops on 24th February 2022 has not yet resulted in a loss of oil supply to the market. Prices nevertheless surged by US$8/bbl to US$105/bbl following the news, on expectations that sanctions against Russia would cripple energy exports.
It is currently unclear what the impact of sanctions will be on crude oil exports from Russia and how long any potential supply losses will last.
The prospect of an extended conflict between Ukraine and Russia has the oil market on edge. In the current tight market, such significant disruptions could keep prices well above US$100/bbl. Already concerned about high energy prices, the US administration seems unlikely to impose sanctions that would directly target Russian exports of crude or petroleum products.
Russia is the world’s third-largest oil producer behind the US and Saudi Arabia. In January 2022, according to the International Energy Association (IEA), Russia’s total oil production was 11.3Mbpd, of which 10Mbpd was crude oil, 960kbpd condensates and 340kbpd NGLs. By comparison, US total oil production was 17.6Mbpd, while Saudi Arabia produced 12Mbpd.
Export Destinations
About 60% of Russia’s oil exports go to OECD Europe, and another 20% go to China. In November 2021, the latest month for which official monthly oil statistics are available:
• OECD Europe imported a total of 4.5Mbpd of oil from Russia (34% of its total imports), of which 3.1Mbpd was crude oil and feedstocks and 1.3Mbpd oil products.
• OECD Asia Oceania imported 440kbpd of total oil from Russia (5% of total imports).
• OECD Americas imported 625kbpd (17% of total imports). US refineries import Russian crudes, including Urals and ESPO blend, as well as fuel oil and feedstocks for blending purposes.
Roughly 750kbpd of crude oil is delivered to Europe via the Druzhba pipeline system. Most immediately at risk is the ~250kbpd of Russian oil transiting Ukraine via the southern branch of the Druzhba pipeline to supply Hungary, Slovakia, and the Czech Republic.
China is the largest single buyer of Russian oil, consuming 1.6Mbpd of crude on average in 2021. Crude oil is exported to Asia via the East Siberia Pacific Ocean (ESPO) pipeline system and waterborne routes.
Russia is also a significant supplier of crude to Belarus, Romania, and Bulgaria, and of products to most of the FSU countries, including Ukraine.

Russia is the world’s largest exporter of oil to global markets and the second-largest crude oil exporter behind Saudi Arabia. In December 2021, it exported 7.8Mbpd, of which crude and condensate accounted for 5Mbpd, or 64%.
Oil product exports totalled 2.85Mbpd, of which 1.1Mbpd was gasoil, 650kbpd was fuel oil, 500kbpd was naphtha and 280kbpd was vacuum gas oil (VGO). Gasoline, LPG, jet fuel and petroleum coke made up the remaining 350kbpd.

Key Exporting Companies
Russia's economy relies heavily on its oil and gas export industry, with the energy sector accounting for over 40% of government revenue. It is no surprise, then, that some of Russia's largest corporations are involved in oil and gas. The country has some of the largest multinational oil and gas companies in the world because it has some of the largest known reserves.
Below are the largest Russian oil companies that together with one unlisted company, Tatneft, accounted for 81% of Russia's oil production in 2021.
Rosneft – a majority state-owned enterprise, it is the overall leader of Russia's oil industry and is one of the world’s largest publicly-traded oil and gas companies.
PJSC Lukoil - was originally government-controlled but is now Russia's largest company not controlled by the state and its second-largest oil producer. The company’s main operations encompass the exploration and production of petroleum products and natural gas in western Siberia, where most of its oil and gas reserves are located.
Gazprom Neft - Though a subsidiary of Gazprom, it is Russia's third-largest oil producer.
Tatneft - is an integrated oil and gas company. It explores for, develops and produces crude oil and natural gas mainly in the Tatarstan. The company refines crude oil and markets petroleum products. Tatneft also manufactures petrochemicals and has operations in heat and power generation. It markets petroleum products to Russia, Belarus, Ukraine, Germany, Switzerland, the Netherlands, and the UK.
Foreign Partners Exit Russia
Some major foreign oil company partners have recently exited Russian oil export projects after a raft of sanctions was imposed on Russia over its war with Ukraine. More foreign partner exits are anticipated. This has resulted in export trade disarray as Russian producers postpone sales, importer countries reject Russian ships and buyers worldwide search elsewhere for crude oil.
ExxonMobil - has been in the country for over 25 years. Its subsidiary, Exxon Neftegas Ltd (ENL), has a 30% stake in Sakhalin-1, a vast oil and natural gas project in the Russian Far East. It has operated the project since 1995 on behalf of a consortium that includes Japanese and Indian partners as well as two affiliates of Russia's largest oil company, Rosneft.
Russia isn't as important to ExxonMobil as it used to be, however. ExxonMobil previously partnered with Rosneft to conduct exploration and research activities in Russia but withdrew from those joint ventures after sanctions were imposed by the US and Europe following Russia's annexation of Crimea in 2014. In February, ExxonMobil faced new pressures to sever ties with Rosneft.
BP - BP once proclaimed itself "one of the biggest foreign investors in Russia". That investment largely took the form of a strategic partnership with Rosneft dating from 2013, in which it owned a 19.75% stake. In February, BP announced its exit from the partnership after Russia’s attack on Ukraine.
Shell - The UK-based company's biggest engagement in Russia is Sakhalin-2, which it describes as one of the world's largest integrated oil and gas projects. In February, following BP’s lead, the company announced its intention to exit its joint venture with Gazprom, including its 27.5% stake in Sakhalin-2 and its 50% stake in the Salym Petroleum Development.
Equinor - is majority-owned by the Norwegian state, and it will start divesting its joint ventures in Russia. It has minority stakes in three Russian oilfields. Norway’s sovereign wealth fund, the world’s largest, will also divest its Russian assets, worth about US$2.80Bn.