The main type of Russian crude oil is sold at a price more than half the price on international markets, Bloomberg reported. The reason for the discount is to be EU sanctions and the imposed limit.
According to Bloomberg, citing data from the Argus Media center, a barrel of Ural oil in the port of Primorsk (Kaliningrad Oblast) was sold for $37.80, while price of Brent crude oil – serving as a global index – was $78.57 on the same day. The ceiling on the price of Russian oil, set in December by the G7 group, is $60.
Russian oil at half price
According to Bloomberg, the main factor behind the decline was the European Union’s introduction of an embargo on Russian oil transported by sea. The loss of the largest market made it Russia was “at the mercy of a tiny circle of great buyers, especially China and India”.
As a result, tankers have to cover greater distances, which increases transport costs and forces the Russians to lower prices so that they can compete with Middle Eastern oil. At the same time, another export type of Russian oil, ESPO, is sold slightly above the price limit. According to Bloomberg, this is the effect of shorter transport routes. However, ESPO accounts for a relatively small percentage of Russian raw material exports.
The agency notes that this puts Russia in a difficult position. Moscow needs “all the revenue it can get to fund it war in Ukraine“, but a further reduction in prices may make it decide to cut production.
Main photo source: EPA/MAXIM SHIPENKOV