IEA chief expects Russia to lose energy struggle, sees major difficulties for Moscow’s exports

International Energy Agency (IEA) Executive Director Fatih Birol believes Russia will lose its energy war with the West, saying crude oil purchases from China and India are unlikely to be enough not compensate for the drop in shipments to Europe.

“Europe has major economic problems, but for Russia, Europe was a very, very important customer,” Birol told CNBC’s Joumanna Bercetche at the World Economic Forum in Davos, Switzerland.

Last week, an independent analysis by the Center for Energy and Clean Air Research showed that Russia’s fossil fuel export revenues plummeted in December, significantly hampering President Vladimir Putin’s ability to finance the war in Ukraine.

The Finnish think tank report found that the first month of the European Union’s ban on maritime imports of Russian crude and G-7 price caps had cost Moscow about 160 million euros ($173.4 million) a day .

He said Western measures were largely responsible for Russia’s 17% drop in revenue from fossil fuel exports in the last month of 2022. A Russian Finance Ministry spokesperson did not responded when asked to comment on the report’s findings.

Birol described Russia as “the number one energy exporter to the world” before Moscow’s full-scale invasion of Ukraine on February 24 last year.

About 75% of Russia’s gas exports and 55% of its oil exports went to Europe, Birol said, before the EU sought to rapidly wean itself off Moscow’s fossil fuels.

“So finding a customer for gas and oil to replace Europe so easily will be extremely difficult,” he said. “I know that there are countries in Asia, [such as] China and India, which are taking advantage of this situation, and which are buying a lot of Russian oil, but I would be very careful to believe that imports from these countries will, both in volume and in terms of income, combine with this what was Europe doing?

“Russia will face major difficulties in both oil and gas exports and, in my opinion, when we look at the next two quarters and years, Russia will lose the energy battle,” Birol said.