In the wake of Russia's invasion of Ukraine in February 2022, Western nations led by the U.S. imposed sanctions as well as a price cap of $60 per barrel on Moscow's sale of crude oil. However, the latest data and soundbites offered by officials suggest the move has proven to be little more than a temporary setback for Russia.

The Kremlin's counter-tactic of diverting oil cargoes from Europe to what it describes as friendly countries in Asia has been hugely successful. It has helped maintain Russia's market position as the world's third-largest oil producer (behind the U.S. and Saudi Arabia) and its second-largest exporter.

In an interview with Rossiya-24, as cited by Reuters, Russia's Deputy Prime Minister Alexander Novak said on Wednesday (December 27, 2023) that the tactic had worked very well.

"The main partners in the current situation are China, whose share (of our exports) has grown to approximately 45-50%, and, of course, India. Earlier, there were basically were no supplies to India. In two years, the total share of supplies to India has come to 40%," he noted.

Novak added that Europe's share of Russia's crude exports had fallen to only about 4-5% from about 40-45%. Data aggregators also point to no letting up in Russian production, excepting temporary setbacks in the immediate aftermath of the imposition of Western sanctions over Q1 and Q2 2022.

The country is currently pumping around 10.6 million barrels per day (bpd) - a figure that includes restraint of about 500,000 bpd as part of its OPEC+ production cuts. That's marginally higher than its production level in January 2022, prior to the invasion of Ukraine.

On average, around half of the oil Russia produced was exported for much of 2023 - a pace that has been maintained and sustained thanks to Beijing and Delhi. The month of August proved to be the only notable exception for the year, according to S&P Global Commodity Insights. That too was down to infrastructural downtime.

The West's $60 per barrel price cap is also appearing farcical with both Indian and Chinese buyers paying significantly above the figure. On average, prices paid Russia's Urals crude have recently ranged between $4-$6 per barrel discounts to Brent prices currently shy of $80 (at close of trading in London on December 28, 2023).

In fact, sources in Indian trading circles suggest that at points of supply stress over the course of 2023, the discount even fell to as low as $3 per barrel from levels as high as $19 at the start of the year.

Under the price cap, Western tanker operators and insurers have been barred from offering services for vessels carrying Russian oil that trades at a premium to $60. However, Russia has proven itself to be deft at accessing a large fleet of non-G7 or European Union insured, shadow tankers.

There is unlikely be a near- to medium-term loss of appetite for Russian crude from China and India. A glimpse of this was recently offered by officials from India's Petroleum Ministry.

In a testimony to the country's parliament, they noted that at times Russia accounted for as much as 40% of the country's demand. That's 1.95 million bpd out of India's total importation of around 5 million bpd, according to a report in the Indian Express.

The country claims its decision to buy Russian crude ensures both market stability predicated on "absorbing" oil that Europe is shunning as well as striking a good bargain for Indian consumers. "Diplomatically, we are a sovereign country and could say that we have been doing what is good for the country as well as the world," said one Indian official.

Therefore, short of the wider global oil market dynamic materially altering, 2024 is unlikely to be any different from 2023 for Moscow's coffers.