(MENAFN- Trend News Agency)
BAKU, Azerbaijan, December 5 . EU member states
have approved a cap on Russian oil prices at $60 a barrel, which
comes into force from December 5.
The document adopted bans sea transportation of products above
this price. So far, the restriction will affect crude oil, and,
from February 5, a cap on petroleum products will be set. The EU
document states that this figure must be at least 5 percent below
the market price.
An embargo is also lifted on oil supplies from Russia to Europe
by sea. At the same time, exports through the Druzhba oil pipeline
are preserved. Thus, the cut totals 2.2 million barrels out of the
total volume of oil supplies to the EU (4.5 million barrels per
The International Energy Agency (IEA) predicts that Russian oil
production will fall by 1.4 million barrels per day next year after
the EU ban on Russian oil imports takes affect.
The IEA experts believe that the decision to deprive Moscow of
revenue will create additional uncertainty in the oil markets and
raise pressure on prices, including diesel fuel.
At the same time, a proposed oil price cap could help ease
tensions, however, many uncertainties and logistical challenges
As Azerbaijani energy expert Ilham Shaban told Trend, the
Russian price cap will certainly affect energy markets.
'At the initial stage, the market will be affected by emotional
factors, as the two parties (the countries that made this decision
and Russia) will come out with opposite opinions. Since the
decision was actually made on Friday, when global stock markets
closed, we will see the outcome on Monday. However, we already saw
a significant drop in oil prices: February Brent futures traded
around $85.5 in electronic trading on Friday,' the expert said.
As Shaban noted, the information released by the US Treasury
states that Russia can continue to supply oil to world markets, if
that prices do not exceed the established upper limit.
'According to the Russian Ministry of Finance, the average
realized price for Urals oil in November was $66.47. But in
November, the cheapest batch of Russian oil was sold for $52. In
other words, based on these statistics, the latest ban imposed by
the West on Russian oil is a kind of legalization of the current
situation on the market. The goal is also to force Russia to cut
oil production. Of course, other players should take Russia's
place. Unlike the gas market, this takes less time in the oil
market. Oil from the US, Saudi Arabia, Iraq, Libya and Venezuela
can replace the lost volumes of Russian crude,' he said.
As for Azerbaijan, the expert noted that the price of oil that
we put on the market is not determined on international
'Azerbaijani oil is guided by the daily spot price of Brent. But
Azerbaijani oil prices may exceed Brent prices, since with a
decrease in sales of Urals oil in Europe, demand for light grade
oil should increase. Here we are talking about Ceyhan BTC Blend
oil, which we export to the global market through Türkiye,' he
According to the State Customs Committee, almost 22,682,798 tons
of crude oil and oil products worth $17.180 billion were exported
from Azerbaijan from January through October 2022, compared to
23,800,444 tons ($11.220 billion) over the same period of 2021.
Thus, Azerbaijan's revenue from the export of crude oil and oil
products increased by 53.1 percent year-on-year.
The share of crude oil and oil products in Azerbaijan's total
exports in the reporting period amounted to 49.49 percent, compared
to 66.59 percent a year earlier.