G7, EU’s oil rate cap on Russia losing effectiveness
Date
11/6/2023 7:35:18 AM
(MENAFN) The price cap imposed on Russian oil by the G7 and EU in late 2022 to reduce Moscow's energy earnings has become less effective, as reported by a news agency on Sunday.
In December 2022, the EU and G7 nations agreed to set a maximum price of USD60 per barrel for Russian seaborne oil exports, and in February, they extended similar restrictions to Russian petroleum product exports. The mechanism allows Western companies to transport, trade, or insure Russian oil only if it is sold at or below USD60 per barrel.
After the initial enforcement of the price cap, Moscow's oil and gas revenues dropped by 46 percent year-on-year to 426 billion rubles (USD4.6 billion) in January. However, they have since increased significantly. According to the latest data from the Russian Finance Ministry, in October, the country's oil and gas revenues reached 1.635 trillion rubles (USD17.6 billion), more than doubling from the previous month and increasing by over a quarter compared to October 2022.
The news outlet suggests that Moscow managed to circumvent the price caps by taking effective measures, consistently arguing that these restrictions violate global market rules. Reportedly, Russia has redirected crude exports to a fleet of aging tankers, often referred to as the "shadow fleet," where the price caps have limited impact.
A recent report from the Kiev School of Economics indicates that Russia's shadow fleet consisted of 180 vessels as of September. Analysts cited by the news agency point out that the substantial size of this fleet ensures that most of Russia's exports are not subject to the price cap.
MENAFN06112023000045015839ID1107378884
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.