![]() ![]() The Russian government collects taxes on the difference between production and transportation costs of oil and the selling price, so lowering the price cap to a level that is close to the cost of production will deprive the government of the ability to fund the war from oil revenue. The most important way to cut Russia’s export revenues further will be to drive down the oil price cap. ![]() Strengthening the sanctions - way forward Until January, the price has stayed beneath the price cap, but showed signs of inching closer to the price cap level of $60. Measured in rubles, the metric that matters for Russian tax revenue, the price in late November was the lowest since the depth of the COVID-19 crisis in early 2020, due to the ruble’s high exchange rate. The price reached as high as $97 in June. The spot price for Urals crude oil fell to $60–65 per barrel in late November 2022, its lowest level since early 2021. In January, the amount of oil products on water was roughly at the same level as in November. For crude oil, the increase in European purchases led to a drop in oil-on-water in November, while the increase for oil products was tempered. The glut of LNG “for orders” has continued since. The increase in “for orders” departures and in product-on-water took place in November for LNG, as Europe’s gas inventories were full and prices dropped. When this happens, we’ll see an increase in vessels that are reporting their destination as “for orders”. This is facilitated by traders who purchase cargoes at a low price and aim to sell them on to a buyer later. When orders for Russian fuels fall, the producers are initially likely to keep loading new vessels, hoping that the product gets taken up later. Is Russia finding new buyers: tracking outgoing oil shipmentsĪ key indicator of whether Russian fossil fuel producers are having trouble finding buyers is an increase in the amount of “product on water”, amount of fuel loaded on ships at a given moment. This Russian oil sanctions tracker aims to answer these questions with data. What happens to the prices paid for Russian oil and oil products?.Do EU countries and the UK increase oil products imports from third countries that import Russian crude oil, such as Turkey, United Arab Emirates, India and Malaysia?.Does Russia manage to find alternatives to European-owned and insured tankers to circumvent the price caps?.How do Russia’s export volumes develop after the bans becomes effective - does Russia manage to fully reroute crude oil exports or do they fall? What dynamics play out with oil products?.The level of this cap is reviewed regularly. Ukraine’s allies are aiming to push down the price further by setting a price cap that applies on all Russian oil carried on tankers owned, insured or financed by companies in the EU and G7 countries, as well as other countries joining the coalition. Persuading other buyers to take more will likely require increasing the discount that Russian sellers offer from international prices. The big question is how much of the European demand Russia can replace by finding other buyers, and at what price. Russia is more dependent than ever on revenue from oil, as tax income from other sources has dropped due to the impact of sanctions on the economy, and revenue from gas exports has collapsed. Imports of refined oil products from Russia and containing Russian crude oil are allowed until February 5, 2023. The EU and the UK banned the seaborne imports of crude oil on December 5, 2022, by far the biggest step to date to cut off the fossil fuel export revenue that is funding and enabling Russia’s barbaric invasion of Ukraine. ![]()
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