At the end of 2022, a ceiling of $60 per barrel was imposed on sales of Russian crude oil transported by sea
Russia’s revenue from oil are falling due to the price ceiling imposed by Western countries on Russian crude oil exports, before the imposition of wider restrictions on Russian petroleum products. Europe is in a good position to manage price pressures, a US Treasury official said yesterday, Wednesday.
The G7 group of countries, Australia and the European Union will expand sanctions against Russia over Moscow’s war in Ukraine by imposing a price cap on its oil products, such as petrol and diesel, on February 5. At the end of 2022, a ceiling of $60 per barrel was imposed on sales of Russian crude oil transported by sea.
Russia is losing significant amounts of money every day by imposing a price ceiling on Russian crude oil, a senior finance ministry official told reporters during a conference call.
“Every dollar that Russia loses in revenue is a dollar that cannot be used to grow its economy or invest in the weapons it needs to fight its illegal war in Ukraine,” the same official explained.
The official did not provide an estimate of the losses to Russia’s income from Russian crude oil exports. However, the imposition of the cap has increased transportation costs for some cargoes of Russian oil, as it forces countries wanting Russian oil to use a fleet of non-Western ships at the risk of using “less reliable” insurance coverage to transport the cargo. according to the same official.
US officials say the price cap is causing price cuts for Russian oil bought by major customers, including India and China.
Russian Deputy Prime Minister Alexander Novak said on Wednesday that the country’s oil producers are not facing difficulties in securing oil export deals, despite Western sanctions and the imposition of the cap.
However, Novak admitted that the main problems for Russian oil lie in its essentially low price compared to international oil prices, but also in the rising cost of transporting it.
US Treasury Secretary Janet Yellen said on Tuesday that senior Russian officials have admitted that the cap reduces Russian oil revenues.
Several high-ranking US Treasury officials have met with European government officials as well as industrial production players this year about the cap on the price of crude oil, as well as impending restrictions on other Russian oil products exported by Russia.
Europe can withstand pressures on its oil products from the war in Ukraine this winter because it has built up crude oil supplies and because of relatively warm temperatures, a Treasury official said.
As a result, cheaper Russian oil could be sold to countries in Africa or other regions that were hit economically by higher oil prices last year due to the war in Ukraine, the same official said.
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