Russian crude currently sells for about $75 per barrel, far above the $60 cap imposed by the Group of Seven (G7) countries in 2022, according to the latest oil price tracking data.
Russian oil is trading even higher in markets such as India, suggesting that G7 efforts to drain Russia’s war machine of oil revenues are failing.
bloomberg news examination Russian crude oil is now worth $75 per barrel when it leaves Black Sea and Baltic Sea ports, according to data released Wednesday by Argus Media, one of the major oil price trackers. There was found.
In India, crude oil from the Ural Mountains is trading at $88 per barrel, just $3.80 less than the global benchmark. Russia was initially forced to sell its oil at a steep discount after invading Ukraine and facing Western sanctions, but that no longer appears to be the case.
Argus Media says the good news is that Russia is paying much more to ship oil to customers in Asia than to older customers in Europe, starting at about $7 per barrel sold. It eats up $8 in profits, but even such high transportation costs are being reduced, he said. That would put even more money in Moscow’s pockets.
The bad news is that these high prices mean Western shipping companies are not honestly reporting the value of the Russian oil they transport.
bloomberg report:
The cap requires Western companies involved in transporting Russian oil to receive a so-called certificate, a document guaranteeing that the price of the cargo is less than $60 per barrel. Otherwise, we will not be able to provide you with the service. The fact that Argus prices are well above that level is creating the dissonance.
Urals has been above $60 for most of the year, but this month it will rise well above $70. [sic] For traders who wish to continue using Western services, these certificates become even more reliable.
As of March, 23% of domestic crude oil shipments had spill and collision insurance provided by members of the International Group of P&I Clubs, according to data compiled by Bloomberg. This means the traders were assured that the price of the cargo was far below the price at which Argus had assessed the price of the Urals. Some traveled on Greek tankers, all of which were under the auspices of the IG Club and also required certification.
Bloomberg News says U.S. officials insist they will vigorously enforce price caps on Russian oil, but oil prices rise around the world and the 2024 presidential election threatens to cause further pain for U.S. consumers. He pointed out that there may be a reluctance to take strong action because it would give the government a lot of money.
G7 tightened Its enforcement mechanism was introduced in December to combat widespread non-compliance. One of the new measures was a “certification” requirement that Bloomberg cited for full disclosure of cargo value. The purpose of the certification was to prevent buyers from paying above the cap for Russian crude or disguising additional payments as shipping costs.
US Treasury claimed that In January, it became clear that compliance was tightening and price caps were cutting into Russia’s oil profits.
Russia’s Ministry of Finance claimed that oil and gas revenues fell by 24% last year, mostly due to lower oil prices and lower gas sales to Europe. Russia predicted it would be able to recover most of its lost revenue in 2024 by increasing oil shipments to new customers in China and India.
