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Russian Oil Inches Closer To G7 Price Cap

The price of Urals, Russia’s flagship export grade, has moved higher since the OPEC+ announcement, threatening the price cap that the G7 and the European Union agreed to impose on Moscow last year in a bid to hurt its oil revenues.

Urals is currently trading at nearly $60 per barrel, meaning this year’s oil revenues could be higher, Deputy Finance Minister Vladimir Kolychev said this week, as quoted by Bloomberg.

The price cap, when agreed upon, prompted different reactions. Russia said it would not sell oil to countries enforcing the cap. Western insurers—the principal tools for enforcement of the cap—complained about difficulties in making this enforcement happen.

According to Axios, the cap appears to be working despite all the challenges. In a recent report, the news outlet noted the decline in Russian oil export revenues from over $20 billion last April to less than $15 billion for February 2023.

The Financial Times, however, reported last month that the price, at which Russian companies sell oil abroad “often exceed the G7-imposed price cap on the country’s exports.” As a result, the report added, the federal government had decided to overhaul the tax code for oil companies in a bid to get a bigger portion of the oil export money.

Meanwhile, Barron’s commentator Ben Cahill noted that OPEC+’s decision to reduce production will likely push Russian oil prices higher, too.

“That will make it harder to enforce the price caps and crack down on illicit oil trade without choking off supplies. Sanctions watchdogs will have to make tough choices,” Cahill wrote.

Indeed, despite the lower oil revenues, which was the primary purpose of the price cap, Russia’s oil exports remain strong—which was the second purpose of the cap, although its authors probably aimed for even lower revenues.


According to Barron’s Cahill, Russia is exporting oil abroad at the same rate as it did before the invasion of Ukraine and the consequent barrage of EU sanctions.

By Irina Slav for Oilprice.com

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  • Francisco Napoleao on April 13 2023 said:
    The price cap was a bad idea, almost all knew about it. The embargo on Russian oil gets even funnier if one considers that getting oil cheaper is too good to be true.

    What happened was that Russian is a main supplier of poorer countries, very happy to be able to buy russian oil at a discount, indifferent to the price cap.

    And the arab monarchies can now demand the price they want from the EU, the rich, arrogant countries.

    Before Asia used to pay a premium comparing to the EU to be able to get oil or gas supplies, now they get it a discount. Even the gulf monarchies sell cheaper to India than to the EU.

    So after 4 months of childhood the west is finally having a reality check. Even with recession they are paying more for oil, while Asia is growing steadily helped by lower energy costs.

    The strongest EU industrial states are deindustrializing, both as a cause of the war and sanctions and because of energy shortsightedness.

    The EU's Green Deal had the intention to introduce artificial mechanisms to improve industrial competitiveness in the EU by imposing in the future ecological/climate change taxes to the emerging economies. By August 2021 they created a energy crisis. As the economical weight of the EU decreases it will be very difficult for the EU to appear as the Global Ecological Aristocracy.
  • Mamdouh Salameh on April 13 2023 said:
    The Western oil price cap imposed in December 2022 on Russian crude oil exports is dead. Western media continues to talk about it as working merely to save face.

    The proof is that Russia’s Urals crude has been selling above the cap and moreover Russia’s other crudes have also been selling way above the cap at $74 a barrel according to US researchers from Columbia and California universities.

    This means that Russia’s oil export revenues in 2023 could be higher according to Russian Deputy Finance Minister Vladimir Kolychev as quoted this week by Bloomberg.

    Yet, Western media rarely quotes Russian government ministers when they say Russia’s export revenues are rising while all of them rush to quote officials mentioning a deficit in the budget whether it is right or wrong.

    And despite the unprecedented Western sanctions, bans and a price cap, Russia is continuing to export 8.0 million barrels a day (mbd) of crude and petroleum products as before the Ukraine crisis. In fact, Russia has succeeded in finding new markets for its entire energy exports.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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