Russian-Ukraine War Redrawing Energy Trade

Alvira Khan & Erin D John 

Global Energy Market 

Energy is one of the most sought-after resources in the world. If on a chessboard, the Queen in this case would be a Sovereign nation that is blessed with this natural resource. The Russian Federation can be considered a prime example of this. The exports of Russia with the EU, China, Turkey, Japan, India and many other countries have elevated it to one of the world’s largest energy exporters. The most significant dynamic in this relationship is the one Russia had with the EU. The energy deficiency in the EU paved the way for this bond, which started during the Cold War, and gradually over the years, Russia became the largest exporter into the union. Russia exported almost 40% of its LNG exports, 50% of crude oil and 70% of pipeline gas into the continent. Second in line, China imported 30% of crude oil exports and around 20% of LNG exports from Russia. A distribution of Russian energy exports can be seen in the chart below. 

Trade Routes

Often energy trade is synonymous with the routes used to transport the precious resource. Wars have been fought for trade routes; such is the value of it. The major trade routes that functioned for the export of Russian energy served as signs of rigorous economic growth in the region and the major ones are as follows. 

• Russia-EU

The pipeline infrastructure was the main route in the supply of energy between Russia and the EU. The Nord Stream 1 was the widely known one as it directly linked Germany to Russia under the Baltic Sea. The Yamal-Europe pipeline catered to Belarus, Poland and Germany. The Druzhba Pipeline catered to a wide range of countries in Europe which include Hungary, Slovakia, Czech Republic and most of Western Europe. 

• Russia – China

China, always being a benefactor of the Russian energy exports also utilized major trade routes via the pipeline infrastructure. The Power of Siberia pipeline being the most prominent one in this relationship pulls the line directly from Eastern Siberia to China.

• Russia-Turkey

The energy exports from Russia to Turkey is active through the blue stream pipeline underneath the Black Sea. Also, the TurkStream pipeline which was also shared by Southern Europe. 

The above was before the Russian-Ukraine War of 2022. The energy trade between Russia and its partners has since then changed drastically. 

The Russia-Ukraine War 

Russia’s 2014 annexation of Crimea, support for Eastern Ukraine separatists, and rivalry over Ukraine‘s strengthening relations with NATO heightened geopolitical threats to initiate the invasion in February 2022. The war disrupted the global energy market as Western nations imposed punitive measures against Russia’s energy sector, destabilizing energy trade flows and trade partners.

Sanctions on the Energy Industry

In response to the war, The European Union, United States, and other NATO allies targeted Russia‘s critical nerve – the exports of fossil fuels. The key sanctions included:

• Russian Oil & Gas Import Ban (Sixth Package): The EU embargoed 90% of Russian crude oil imports except for landlocked EU nations like Hungary, Slovakia, and the Czech Republic.
• Natural Gas Limits: The EU and UK levied punitive restrictions on LNG and coal imports to reduce dependence on Russian energy.
• Technological Exports: Western nations imposed controls on dual-use technologies like industrial equipment and microchips that would be used for energy production and oil refining.
• Disconnecting Russian Banks from SWIFT: Major Russian banks were disconnected from the SWIFT global payment system, making it impossible for Russia to enable trade transactions in international energy markets.

New Trade Routes & Alliances

As evident from the above discussion, Russia was the EU’s leading energy partner. However, due to the sanctions, the traditional trade routes mainly Nord Stream Pipelines 1 and 2 are non-operational. In 2023, oil exports through the Druzhba pipeline experienced a  60% decline but as of March 2025 is temporarily suspended due to a Ukrainian drone attack on its metering station. The ultimate closure forced the EU to secure alternative supply chains via establishing new trade routes. 

• EU-US 

The Transatlantic Energy Corridor serves as a critical trade route connecting Europe and North America, with the United States becoming a key supplier of oil and petroleum products (15%) followed by Norway (12%), Saudi Arabia and Kazakhstan (8%) 

• EU-Norway 

The Norwegian North Sea paved the way for Norway supplying 71% of the EU natural gas imports followed by the US (19%), Algeria (14%) and Russia (11%)

• Australia-Europe 

The Indian Ocean-Atlantic maritime shipping route enabled Australia to become the     supplier of solid fossil fuels (24%) followed by the US (23%), Columbia (17%) and South Africa (13%)        

As the EU sought alternative energy suppliers, the Western-imposed sanctions and price cap on crude oil led Russia to offer energy at below-market prices to alternative buyers such as China, India (which increased its crude oil exports by 1000%) and Turkey. Additionally, since Russia was cut off from the SWIFT banking system, 90% of bilateral trade between Russia and China was conducted in yuan. A renewed allocation of Russian energy exports is shown below, highlighting its evolving trade alliances

The position of Russia in the geopolitical playground that yielded influence like no other shifted gears since February of 2022. The players on the field have assumed different positions and the global energy market as we knew it changed forever. However, the purpose of this article in its entirety is to highlight first what has transpired over time and second to find who is gaining the most out of this. The newly emerged trade dynamics indicate that the US and China have been the biggest benefactors from the conflicts as depicted in the interactive chart given below:

Conclusion

The energy sector is not just about power grids or oil, it shapes economic development, national security, political influences and the very sustenance of certain currencies across the world. The Russian energy trade is a small but definitive piece of the global energy scene. However, in recent times this important piece is more turbulent than ever, and this game is far from over. 

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