By Rhod Mackenzie
The price of Russian Urals oil has exceeded the price ceiling ($60/bbl) set by the Price Capping Coalition (G7, EU and a number of other countries).
This is according to data from the pricing agency Argus Media.
Aiming for the ceiling
On July 12, 2023, in the port of Novorossiysk, the cost of Urals oil was $60.78/bbl,
Prior to this, the price of Urals in the port of Novorossiysk fluctuated in the range of USD 52-55/bbl:
by June 1, the price was $52/bbl, itrose to $55.1/bbl by June 21, after which it dropped back to $52/bbl,
On June 30, the price began to grow and reached $54.1/bbl,
On July 11, the price reached $59.98/bbl, and on July 12 - $60.78/bbl.
A test of the sanctions
The Wall Street Journal (WSJ) drew attention to the approach of Urals oil prices in the port of Novorossiysk on July 11 to the level of the price ceiling.
The publication noted that this situation means that Western sanctions against Russia will have to be tested for strength.
Bloomberg called the price ceiling exceeding a blow to Western efforts to impose sanctions and a possible economic victory for Russia.
For example, Russia has managed to assemble a shadow fleet of tankers large enough to transport oil to buyers who are less in need of the services of companies from the G7 countries.
According to the head of the geopolitics department at the consulting company Energy Aspects Ltd.R. Bronze, a significant expansion of the shadow tanker fleet, alternatives to Western insurers and payment methods create alternatives that will likely allow Russian oil to continue shipping.
On the other hand, a number of experts believe that reaching the price ceiling mark for Urals oil will create problems for buyers, for example, for India. Vanda Insights founder V. Hari said Indian banks have been extra cautious over the past few months for fear of sanctions by requiring refiners to prove that the FOB price of oil purchased was below $60/bbl in order to make a payment.
For Russia, she said, this could have a negative effect, as it would require higher discounts for buyers in Asia to keep supplies attractive.
Otherwise, intermediaries will have to cut their profits.
Australia's Commonwealth Bank Mining and Energy Research Director W. Dhar believes Russia will have to rely more on its own tankers and services, or on friendly countries, but there will come a point when it will become difficult to replace Western services.
The US Treasury said it is closely monitoring the market for potential price ceiling violations.
The ministry recalled that transactions above $60/bbl that do not use the services of the Price Capping Coalition do not constitute a violation of the price ceiling.
However, according to the US Treasury Department, a significant proportion of Russian oil transactions are still carried out by the coalition's service providers.
This article originally appeared in Russian at neftegaz.ru