Russia’s revenues from oil exports rose again in April, which exposed all the weaknesses in the implementation of the policy of limiting the price of Russian oil that the West introduced to deprive Moscow of financial potential for the war in Ukraine, the analysis of the Center for Research on Energy and Clean Air (CREA) showed ).
In an analysis, CREA experts based in Helsinki, Finland, state that Russia’s revenues from oil exports in the period from March to April reached the highest level since November last year, although the leaders of the G7 group of the most industrially developed democracies concluded at the Hiroshima summit that “oil price ceiling” works.
The decision on the upper limit of the price of Russian oil, which would also apply to third countries, was made by the leaders of the G7 and the European Union, and it was part of the eighth package of EU sanctions, which came into force in December.
According to CREA, the policy of limiting the price of Russian oil worked well at the beginning, but it gradually weakened because those who introduced it did not follow the movement of oil prices, or violated it themselves.
According to one of the authors of the analysis, the EU has not fulfilled what it committed itself to, which is to review the Russian oil price limit every two months and ensure that it is below the average market price.
In addition, tankers owned by European countries or under their flags continued to transport Russian crude oil, which, according to analysts, is a clear sign that the implementation of the decision is not working.
The analysis states that the authorities in the Kremlin carefully monitored the movement of the price of Russian crude oil, which is an indicator of how important this export is to it, as well as that Russia changed its tax rules in order to reduce the damage from the price limit.
If the coalition that introduced the limit does not take measures to reduce this “price ceiling” and does not “plug the vagueness in the implementation” of its policy, the changes in the Russian tax system will bring the prices of its crude oil closer to the price on the international market and lead to a further recovery of Russian export revenues. , is evaluated in the analysis.
Since the ban on the import of Russian oil into the EU was introduced, and then the price limit was introduced that also applies to third countries, according to some estimates, Russia has earned 58 billion euros from the export of oil from offshore wells. Most of it was transported by tankers owned or insured in European countries.
CREA estimates that Russian revenues from oil exports could be reduced by an additional 22 billion dollars if the current limit were lowered to 30 dollars per barrel, and the price limits for oil derivatives were updated accordingly.
CREA estimates the production price of a barrel of Russian oil at around $15.
The key recommendations of the analysis are to prohibit tankers that violate the limit from entering EU and G7 member ports, as well as to ensure that payments are made through authorized actors and with certified contracts, in order to prevent fraud.
Already during the introduction of the upper limit for the price of Russian oil, EU and G7 officials emphasized that it is a complicated mechanism that can only work if the rules are followed and important service activities, such as insurance and oil transportation.
Hungary, Cyprus and Greece resisted the price cap for the longest time, and the last two because they have large fleets of oil tankers.
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