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Russia to Slash Crude Export Duties as Oil Prices Fall

Russia is set to slash its crude oil export duty by 5.7% for December as the price of its Urals blend drops, Bloomberg reported on Wednesday, citing the Russian Finance Ministry. 

The new duty starting in December is reportedly set to the equivalent of $3.37 per barrel or $24.7 per ton, according to Bloomberg. 

Last week, Bloomberg cited Argus Media as assessing Russia’s flagship Urals crude blend at $66.19 at the Baltic port of Primorsk, signaling the lowest prices for Urals since late July this year, when Urals topped the G7-imposed price cap. 

The Russian Finance Ministry, however, said Urals was selling for $79.23 between mid-October and mid-November, down from $83.35 in the previous period. 

The government will lower the duty to $24.7 a ton next month as the price of the country’s key export blend Urals declined, the Finance Ministry said Wednesday. That’s down by 5.7 percent from November and equates to about $3.37 a barrel.

According to Trading Economics data, Urals has seen a 24.61% increase so far in 2023, based on data on trading on a contract for difference (CFD) tracking Urals. The highest price Urals ever achieved was nearly $118 per barrel in Q1 2013. On Tuesday, the International Energy Agency (IEA) said Russia’s oil export revenues had declined by $25 million to $18.34 billion in October, in tandem with declining oil prices. The IEA suggested that lower crude oil prices more than offset the shrinking discount for Urals in defiance of the G7 price cap. The international agency said Russian oil exports fell by 70,000 bpd in October, month-on-month. 

The G7 price cap mandates that Russian crude oil shipments to third countries can only use Western insurance and financing if Urals is sold below the $60 price cap. On Tuesday, a European Union official told the Financial Times that “almost none” of Russia’s October crude shipments were executed below the price cap. 

By Charles Kennedy for Oilprice.com

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