Russia sells 99% of oil above Western price ceiling

“Even unfriendly countries have to say that the so-called price ceiling for Russian oil has not worked. More than 99% of oil is traded above the ceiling of $60 a barrel,” Vladimir Furgalsky, an official at the Russian Energy Ministry, said during a roundtable discussion at the Russian Upper House.

In December 2022, the European Union, the G7 countries and Australia decided to impose a price cap on Russian oil to limit Moscow's financial resources. This measure prohibits companies providing maritime services such as insurance, finance and transportation for Russian oil sold at prices above $60/barrel.

Russia can still sell most of its oil production above the $60/barrel price ceiling imposed by the West at the end of 2022. (Photo: Reuters)

Following the move, Russia has cut exports of oil and oil products due to difficulties in finding enough ships to transport all of its output.

However, Russia has sought to ship most of its oil exports to foreign or non-Western shippers who do not need insurance from the West.

Russia's state bank VEB forecasts total oil exports to reach 242 million tonnes in 2023, down slightly from 248 million tonnes in 2022.

Also according to VEB's forecast in 2024, Russia's oil exports will have little change, remaining at 241 million tons.

Andrei Klepach - Chief Economist of VEB - said that Russia's pipeline gas exports to Europe will continue to decline sharply - to 16 billion cubic meters in 2023.

“And exports will not recover until our relations change completely, but that is certainly in the very distant future,” Mr. Klepach noted.

Russia accounts for about 10% of global oil supplies. Since March, Moscow has decided to reduce production by 500,000 barrels per day, equivalent to 5% of total oil production, in response to the Western price ceiling mechanism.

Kong Anh (Source: Reuters)

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