A near-complete ban on Russian oil imports to the EU has finally hit Russia's oil revenues. Worries that these revenues could provide the Kremlin with a profit to finance the war against Ukraine have not materialized - so far. Bloomberg writes about it..

The US administration feared that EU sanctions against Russian oil imports by sea would lead to a sharp rise in prices. Of great concern was the ban on the provision of ships and services such as insurance and financing for Russian cargo moving anywhere in the world..

To mitigate the consequences, the United States proposed to set a limit on the price of Russian oil. Cargo purchased at a price below the limit eventually set at $60 per barrel would be exempt from the ban on the supply and provision of services.

But they don't seem to need to worry, at least not yet..

The last barrels of Russian oil were shipped to European ports. Moscow has lost the market for more than 1.5 million barrels per day. It looks like Russia will lose another 500,000 barrels a day of sales before the end of the year if Poland and Germany fulfill their obligations to stop oil imports via pipelines..

However, oil prices not only did not take off, but also fell.. By Friday, Dec. 9, the fifth day of the import ban, Brent oil was below $77 a barrel and briefly fell below $76. This is more than 14% below the highs reached since the restrictions went into effect..

Prices for crude oil deliveries fell even more. Russia's key export grade Urals traded at just over $40 per barrel in the country's Baltic ports, which remain Russia's largest oil market.. This roughly corresponds to the level defined as the break-even cost of production, but well below the $60 per barrel price cap imposed by the EU along with the import ban..

The continued importance of Russia's Baltic ports even after Moscow's loss of the European market testifies to the country's inability to redirect oil flows.. The only pipeline to China and the Russian export terminal on the Pacific coast at Kozmino is already full, and the only way to supply the last Russian markets remaining in China, India and Turkey is through long sea voyages around Europe and through the Suez Canal.

EU sanctions not only did not create an oil shortage, but also led to a local glut of these markets.

Huge volumes of Russian oil compete with flows from traditional suppliers in the Middle East, and sellers are forced to provide large discounts to offset the high cost of the long journeys required to bring cargo from the Baltic region.

Meanwhile, Europe is not fighting for oil. Russia's invasion of Ukraine, which has caused inflation, rising food and energy prices, has undermined the economies of Europe to such an extent that the world can easily cope with the loss of Russian barrels, at least for now.

This may change in the coming months. China is easing its COVID-related restrictions, which could eventually lead to higher fuel demand curtailed by travel restrictions and a slowdown in economic activity. This will narrow the market again.

A potentially more dramatic EU ban on imports of Russian oil products such as diesel fuel is also approaching.. It could undermine oil markets already short of transport fuel..

Meanwhile, Russian President Vladimir Putin is threatening to cut oil production in response to price cuts.. At the same time, the oil industry of the Russian Federation can make a decision for him if it cannot profitably sell oil..

The Kremlin is already facing a big blow to its revenue from crude oil export duties.. Based on oil prices since the middle of last month, Russian tariffs per barrel could well fall in January to their lowest level since the COVID-19 pandemic cut revenues in early 2020.

So far, the world has been doing a good job of redirecting Russian oil from Europe to Asia, with the costs hopefully falling on the Kremlin in Western capitals..

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Recall that on December 5, an embargo on offshore oil supplies from Russia to the EU countries came into force and the price limit for Russian oil set by the EU, the G7 countries and Australia began to operate.. The so-called insurance boycott of Russian oil also began to operate - insurance companies are prohibited from providing services to companies whose tankers transport Russian oil in violation of the price limit.

Russia in response to these sanctions wants to set a minimum price for its oil, which is exported.