The G7 and EU have implemented a price ceiling mechanism of $60 per barrel with the aim of reducing Moscow’s energy revenues. According to the Ministry of Finance, the average price of Russia’s flagship Urals blend of crude oil in October was $81.52 per barrel. This figure exceeded the $60 price cap set by the G7 and EU by 35%. The discount to the Brent benchmark was calculated as $9.57 per barrel.
When comparing the average cost of Urals over the course of a year, data shows a 15% increase in October 2022, with a barrel of Russian oil trading at $70.62. However, when examining monthly data, October saw a decrease of nearly 2%, with the average cost of Urals in September being $83.08 per barrel.
The average price of Urals over the first 10 months of this year decreased significantly compared to the same period in 2022, standing at $61.84 per barrel versus $79.57.
The International Energy Agency (IEA) reported that Russian oil export revenue jumped by $1.8 billion in September, attributing the increase to a combination of growth in total export volumes and higher average prices for Russian crude and oil products. In September, Russia earned $18.8 billion from oil exports, making it the most lucrative month since July 2022, according to the IEA.
Despite the efforts of the EU and G7 countries, data suggests that the $60 per barrel price cap on Russian seaborne oil exports, agreed upon in December 2022, has not been effectively enforced. Similar restrictions were also introduced in February for exports of Russian petroleum products, but they have seemingly fallen short in curbing Russia’s energy revenues.
In response, Russian President Vladimir Putin signed a decree, effective from February 1, which introduced retaliatory measures against the price cap on Russian oil exports. The decree prohibits the supply of oil and petroleum products to countries that enforce a price cap in their contracts, as well as any deliveries if a contract directly or indirectly mentions the cap.
The situation has highlighted the ongoing struggle between Russia and the G7 and EU, as both sides attempt to control and regulate Russia’s energy revenues. It remains to be seen how successful these efforts will be in the long run.
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