By Olga Samofalova
Russia has been selling its Urals grade crude oil above the sanctions price ceiling for two months now. However, the West it appears is in no hurry to adjust their sanctions policy, although it initially threatened to do so every two months. The US and Europe are not silent for a reason. Its that they do not want to admit that their sanctions against Russia again are not working. How does Russian oil manage to get around these bans and still replenish the Russian budget?
Since July, Russia has been selling its oil, as well as fuel oil and diesel, above the sanctions price ceiling, but the US and the G7 are silent about this and appear are in no hurry to adjust the ceiling.
Four people familiar with G7 policy told Reuters that the US and G7 members have no immediate plans to change the sanctions scheme. Although some EU countries were interested in a revision, but the desire of large Western economies, of course, is more important. The lobby of the upcoming UN General Assembly later this month could serve as an informal price negotiating platform, the agency said.
However, analysts doubt that the West will change anything further. When Western countries introduced their price ceiling for Russian oil and oil products, they promised to study the dynamics every two months and revise the price ceiling in order to prevent Russia from earning from their oil sales.
In December 2022, the European Union and the G7 countries introduced a price limit for oil from Russia – it cannot be sold above $60 per barrel. However, in July 2023, the average price of Russian Urals grade crude was higher – $64.37 per barrel, and in August it reached $74 per barrel, the Finance Ministry said . “The grade of our ESPO oil and Sakhalin grades have never been below $60 per barrel even during the ceiling. That is, the sanctions have never worked against this grade of oil,” notes Igor Yushkov, a leading analyst at the Russian Financial University and the National Energy Security Fund.
“The sale of Urals oil above the price ceiling is possible due to the significant increase in world oil prices, in principle, which is largely due to the actions of Saudi Arabia and Russia within OPEC+ to reduce oil exports. And also by solving most of the problems with oil transportation, which can be seen from the significantly reduced freight rates,” says Philip Muradyan, senior director for corporate ratings at the Expert RA agency.
The West thought its sanctions would work like this: the world fleet would not carry Russian oil, which costs more than $60 a barrel, so Russia would have to adhere to a price ceiling and its export earnings would fall. However, in practice, everything got out of the West’s ‘control.
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Russia managed to push through the western oil price ceiling
By Olga Samofalova Russia has been selling its Urals grade crude oil above the sanctions price ceiling for two months now. However, the West it appears is…