Prices and Volumes: Why Russian exports seemed invulnerable to sanctions and why they look vulnerable now

Russian exports — 2024: stability and vulnerability

According to preliminary estimates from the Central Bank, Russia’s commodity exports in 2024 amounted to $417.2 billion, slightly lower than in 2023 ($424 billion) but close to the ten-year pre-war average ($421 billion, based on balance of payments data). While, in real terms, export revenues are shrinking due to dollar inflation, it can still be said that after three years of sanctions, the Western coalition has failed to significantly reduce them.

However, this does not mean that sanctions are ineffective, as some journalists claim. The average price of Brent crude over the ten pre-war years was $71.8 per barrel, whereas in 2024, it was $80.7. According to data from the International Energy Agency (IEA), cited by Reuters, Russia earned $192 billion from crude oil exports in 2024, selling it at an average price of $69 per barrel – $11 lower than it could have. On an annual basis, this means sanctions on Russian oil deprived Putin of approximately $30 billion in revenue (around 15% of total oil income). This aligns closely with previous estimates of the impact of the price cap (→ Re:Russia: The Spectre of Surplus).

In December 2024, Russian export revenues fell sharply. Total exports amounted to $31.3 billion, nearly 20% lower than in December 2023 ($38.7 billion) and below the 2024 monthly average ($35 billion), despite the usual year-end acceleration in exports. Analysts at Raiffeisenbank analysts believe this was likely due to sanctions imposed in late November on Russia’s banking sector, which disrupted payments and possibly slowed export flows. Meanwhile, imports in December 2024 (as well as in the fourth quarter overall) exceeded last year’s levels, driven by growing domestic demand, according to the Central Bank notes. As a result, the trade balance dropped to its lowest level in recent years ($5.6 billion), and the balance of payments turned negative (-$1.3 billion).

This development highlights the vulnerability of Russia’s wartime foreign trade: despite sanctions and import substitution efforts, it is consuming more imports (in monetary terms) than in the pre-war period. While export revenues remain close to the ten-year pre-war average, annual imports in 2022–2024 averaged $291 billion (reaching $294.5 billion in 2024) compared to the pre-war average of $265 billion.

The overheating of Russia’s war-driven economy in 2023–2024 has led to a significant imbalance between supply and demand for goods in the domestic market. This gap has been partially offset by increased imports. However, if exports decline further and the ruble weakens, forced import reductions could become a new destabilising factor, one that even budget injections may not be able to counter.

Even more raw materials: minus cars, plus grain

The structure of Russian exports has changed only slightly but significantly during the war and sanctions period. The Federal Customs Service (FCS) has provided minimal data on foreign trade since the war began and sanctions were imposed. Currently, only figures for January–October 2024 are available for broad product categories. These indicate that mineral products (oil, gas, coal, and ores) accounted for 61.5% of total exports (compared to an average of 63% over the ten pre-war years). Despite reduced gas shipments and declining coal revenues in 2024, Russia earned $217.9 billion from mineral exports in January–October 2024, which is roughly in line with the average earnings for the same period in 2019 and 2021 ($219 billion).

Structure of Russian foreign trade (2012-2024) by key commodity groups, in billion USD

About 15% of Russian exports in 2024 came from the sale of metals, metal products, as well as precious metals and stones – totaling approximately $60 billion for the year, based on trends from January to October. On the eve of the war, Russia sharply increased its exports of precious metals and stones, which led to total earnings of $82.6 billion in 2021 from this broad export category, which includes both standard and precious metals and stones. By 2024, revenues in this category had declined by about 25%: from $69 billion in January–October 2021 to $51.6 billion in 2023 and $51.2 billion in 2024 over the same period.

An important stabilising factor in Russia’s foreign trade has been the export of agricultural products, whose share of total exports grew from 6% in the late 2010s to 10% in 2022–2024. Between 2017 and 2020, annual revenues from this sector averaged around $25 billion, rising to $35 billion in 2021 and around $42 billion during the war years. This export category, primarily targeting non-Western markets, has become a strategic priority for the Russian government (→ Re:Russia: New Oil).

Conversely, the war and sanctions have had the most significant impact on two export categories: wood and machinery & equipment. While Russia earned around $14 billion annually from wood exports in the pre-war years (2019–2021), this figure dropped below $10 billion in 2023–2024 – a decline of roughly 30%. However, an even greater loss was seen in the broader export category of 'Machinery, Equipment, and Other Goods,' which contracted by about one-third. In the pre-war years (2019–2021), Russia earned approximately $36 billion annually from this sector ($40 billion in 2021), but by 2023, revenues had fallen to $23 billion, and based on the first ten months of 2024, they are expected to drop by another $1 billion. This decline roughly offsets the gains seen in agricultural exports.

Since the beginning of the war, the Federal Customs Service (FCS) has combined export data for machinery & equipment with other goods that do not fall into major broad categories. As a result, it is impossible to determine the exact decline in machinery exports, but based on pre-war ratios, losses in this sector could amount to approximately 40% of its total value.

Thus, while overall export volumes have remained at pre-war average levels, the war and sanctions have made Russia’s export structure even more simplified – meaning even more dominated by raw materials. Before the war, the three largest export categories – mineral resources, metals, and agricultural products – accounted for 80% of total exports; now, their share has risen to 85%, while the share of chemicals and machinery & equipment has dropped from 15% to 11%.

The cumulative effect of ‘long-term’ sanctions

The paradox of Russia’s export resilience to sanctions is largely explained by a broad surge in prices for key commodities – metals, minerals, energy products, agricultural raw materials, and fertilisers – beginning in the early 2020s, following a period of relatively low prices in the mid-2010s. The widespread price boom started in 2021, not only restoring energy prices but also boosting non-energy exports by a third compared to pre-pandemic levels ($249 billion vs. $187 billion in 2019). The war and sanctions further fueled price spikes for gas, oil, coal, fertilisers, and food.

Global price indices for Russia's main commodity exports, 2012-2024, 2011 = 100%

The paradox of Russia’s raw material exports lies in the fact that rising prices for key commodities have offset or compensated for losses caused by lower export volumes and rising costs. As a result, Russian exports appeared resilient to sanctions, which in the short term actually contributed to price increases. Prices for Russia’s primary export goods remain higher than in the mid-2010s but are now lower than in 2021 and 2022. Accordingly, compared to those peak years, the value of exports has declined by 15% and 30%, respectively, while remaining nominally unchanged relative to 2019 and the long-term pre-war average.

However, in the medium term, the situation is shifting. Other exporters are gradually increasing their supply, intensifying market competition and driving prices down. At lower prices, the effects of sanctions – higher costs and limited market access – become increasingly significant competitive disadvantages for Russian exports. This trend is reminiscent of the OPEC+ agreement: previously, even minor production cuts by participants led to price increases that offset volume losses, but once non-OPEC+ countries began ramping up production, price gains no longer compensated for voluntary output restrictions.

In the context of a downward trend in commodity prices, the primary threat to Russian exports is not so much a sudden oil price crash, as is often discussed, but rather a gradual decline in revenues across key export categories. This cumulative effect could become more pronounced starting in 2025.

The same minerals: delayed effects

A decline in Russian oil revenues in the near future is likely but on a limited scale. This could result from a combination of two factors: new sanctions targeting Russia’s 'shadow' tanker fleet and broader market conditions. According to the IEA's January forecast, global oil demand in 2025 will reach 104 million barrels per day (bpd), while supply will be 104.7 million bpd. Meanwhile, OPEC countries are inclined to increase production by rolling back voluntary cuts. If sanctions remove some Russian oil from the market, the result will likely be market rebalancing or a slight price increase.

The IEA estimates thattankers targeted by new sanctions accounted for about 22% of Russia’s seaborne oil exports in 2024 – 600 million barrels, or approximately 1.6 million bpd. Analysts and brokers surveyed by Bloomberg agree that the impact of new sanctions will be mitigated by an increase in ship-to-ship transfers of Russian oil onto 'clean' tankers in open waters. Regarding Surgutneftegaz and Gazprom Neft, which together account for about 20% of Russian oil exports, Sergei Vakulenko, an expert at the Carnegie Centre in Berlin, believes these companies will redirect more sales to the domestic market, while competitors will shift supplies abroad. However, transshipment and other sanction-evasion methods will drive up shipping costs. The problem is not Russia’s ability to sell its oil but the loss of its price advantage, concludes Vetsa Ramakrishna Gupta, CFO of India’s Bharat Petroleum. Previously, in a tight market, high prices outweighed rising transportation costs. But in an oversupplied market, price pressure on Russian oil will intensify.

The situation with Russian gas also depends more on pricing than on export volumes. The sharp reduction in pipeline gas deliveries to Europe has been painful, but in a supply-constrained European market, the impact has not been as devastating as some expected. Today, prices remain more than twice as high as in 2019. However, as prices decline, export volumes will become increasingly critical.

Since 2025, Russia has ceased gas supplies to Europe via its last remaining direct pipeline – through Ukraine. In 2023–2024, these deliveries amounted to 15 billion cubic meters annually. According to Vakulenko's calculations, this represents 16% of Gazprom’s total export portfolio. If European gas prices remained at $300 per 1,000 cubic meters, Russia would lose about $4.5 billion per year from this supply cutoff. However, if the price rises by around $100 per 1,000 cubic meters on the remaining 40 billion cubic meters of Russian gas exported to Europe (including LNG), the losses would be negligible. Still, the gas deficit in Europe, which emerged this year, is expected to be offset in the future by additional LNG supplies. As prices fall, Gazprom’s volume losses will increasingly translate into revenue losses.

Negotiations on the de facto redirection of Ukrainian gas transit to Europe via Azerbaijan have stalled, sources at Azerbaijan’s Socar told Reuters, though talks may resume. Some of the lost volume will be compensated by increasing deliveries to China through the Power of Siberia pipeline, from 31 to 38 billion cubic meters – the pipeline’s maximum capacity. To restore or expand pipeline gas exports, Russia needs to complete the so-called Far Eastern Route (formerly Power of Siberia 3), which has a projected capacity of 10 billion cubic meters. According to statements by Gazprom's management, this pipeline is unlikely to be operational before 2027.

At the same time, as Russia reduces pipeline gas deliveries, it is increasing LNG exports to Europe. In 2024, LNG revenues amounted to €7.32 billion, 14% higher than in 2023. However, due to sanctions, Russia will likely be forced to cut LNG exports by around 5%, according to IEA experts. By 2027, the EU plans to completely phase out Russian energy imports, including LNG. Bloomberg reports that this might happen slightly later due to delays in launching major LNG projects and disagreements among European nations. Nevertheless, in the second half of the 2020s, Europe is expected to balance its gas needs without Russian supplies, for which alternative markets will be difficult to find, while prices for remaining Russian exports will decline.

Russian coal exports have already entered a crisis. According to the analytical agency Argus, cited by Vedomosti, coal exports in 2024 fell by 8% to 195 million tons. Exports from Russia’s key mining region, Kuzbass, declined by nearly 10.4%, significantly worsening the region’s economic situation. The main reason for this downturn is high logistics and transportation costs amid declining global prices. Rail transport costs for coal exports to Asia – now accounting for over 80% of Russian coal shipments – represent two-thirds of its final price. Argus analysts estimate that after deducting delivery costs, the selling price of most Russian coal grades is around $35 per ton, insufficient even to cover mining expenses.

Coal exports to China, the world’s largest coal consumer, also fell by 7% in volume and 25% in price. Meanwhile, China's overall coal imports increased by nearly 15%, with Australia and Mongolia filling the gap left by Russia, increasing their exports by 60% and 19%, respectively, Bloomberg notes. However, the Black Sea route is also proving too costly: India and Turkey, the largest importers of Russian coal after China, have also sharply reduced purchases, Vedomosti writes, citing a report from the Center for Price Indices. Given falling coal prices, the much-discussed 'pivot to Asia' for Russian coal is proving to be an illusion.

According to IEA estimates, Russia’s coal export revenues have declined by 20% compared to 2021, when, according to Federal Customs Service data, they totaled $17.6 billion. This suggests that revenues shrank to approximately $14 billion in 2024. A source from a major Russian coal holding told Kommersant that in 2025, the impact of negative factors – especially lower prices – will intensify. Amid tight monetary policy, this could push smaller companies into bankruptcy. The IEA forecasts that Russian coal exports will decline by another 7% in 2025.

If prices for mineral commodities continue to decline from their early 2020s peaks, reduced Russian supply volumes will eventually weigh on export revenues. However, non-market factors could disrupt this trend – such as increased US pressure on Iranian oil exports, as suggested by Donald Trump, or a trade war between the US and Europe.

The disappearing shock absorber

If mineral export revenues decline, the situation in other export sectors (accounting for around 40% of total exports) becomes critical, as they may or may not serve as a financial buffer. However, growth in machinery and equipment exports is unlikely, and the loss of Western markets has created a deadlock for Russia’s timber industry. Metals and agricultural products, which together represent around 25% of Russian exports, could partially offset falling energy revenues, but they are also experiencing a downward trend.

In 2024, demand for steel and its production declined both in Russia and globally. According to the World Steel Association (WSA), , global steel production fell by 0.8%, while Russian output dropped by 7%. Weak demand worldwide is attributed to economic stagnation in Europe and slower growth in China. Domestically, Russia's decline is linked to the cancellation of subsidised mortgages and an increase in the central bank's key interest rate. Additionally, Russian exporters face challenges in making payments and rising logistics costs, making it difficult to redirect excess production to export markets, experts told Forbes. In 2025, a weaker ruble may make Russian steel more competitive, but Asian markets are experiencing fierce competition among steel exporters and oversupply driven by the growth of Chinese exports.

Moderate global economic growth is also leading to stagnating demand for non-ferrous metals. Additionally, in December 2023, the EU banned imports of Russian pig iron, ferroalloys, iron, copper and aluminum wire, foil, and certain types of pipes. In 2024, the UK and the US imposed restrictions on Russian aluminum, which was subsequently delisted from trading on the London Metal Exchange and the Chicago Mercantile Exchange. These measures were a response to the significant drop in iron ore and non-ferrous metal prices compared to their 2021–2022 peaks. The market appeared stable enough to remove Russian products without triggering price shocks.

In 2025, analysts expect global aluminum and copper prices to decline. According to Bank of America forecasts, aluminum prices may fall by 6%, while copper could drop by 12%. Nickel prices, despite strong demand from the renewable energy sector, remain stagnant due to a sharp increase in production in Indonesia. Thanks to Chinese technology and investment, Indonesia has achieved a technological breakthrough in nickel production. Bloomberg reports that, to support prices, Indonesia is even considering introducing production quotas.

Over the past two years, agricultural exports have played a balancing role in Russia’s foreign trade. In 2023, exports amounted to $43.5 billion, and government forecasts suggested a similar figure for 2024. By October, the Federal Customs Service recorded only a slight 2.4% decline compared to the previous year. However, in 2025, exports are expected to shrink significantly due to a poor harvest. In 2022, Russia produced a record-breaking 153 million tons of grain, followed by 147 million tons in 2023. But in 2024, the harvest dropped to just 125 million tons, returning to 2020–2021 levels, according to data from the Institute for Agricultural Market Conditions, cited by ‘Interfax’. Arkady Zlochevsky, head of the Russian Grain Union, forecasts a one-third reduction in wheat exports.

Beyond 2025, a potential expansion of agricultural exports could come from increased shipments to China. However, Russia has struggled to expand its presence in the Chinese wheat market. Zlochevsky attributes this to the absence of 'top-level political decisions,' while Australia and Canada remain China’s primary wheat suppliers.

Thus, a slowing global economy, fierce competition in Asian metal markets, a weak harvest, and the increasing toxicity of Russian exports will erode the shock-absorbing effect of Russia’s non-energy exports. Overall, the early 2020s commodity price boom – fueled by war and sanctions – is fading, and markets are adjusting to reduced Russian supplies. In this cooling price environment, the focus is once again shifting toward securing market share and lowering costs. Russia is not well positioned for this competition. Just as the broad price surge of 2021 significantly boosted export revenues, even a gradual but widespread decline in prices could lead to a substantial collapse in earnings. Meanwhile, Russia’s pivot to a wartime economy has paradoxically deepened – rather than reduced – its dependence on imports.