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The price of Russia’s flagship Urals crude grade averaged $47.85 per barrel in March, nearly two times lower than in March 2022, when it averaged $89.05 a barrel, the Russian Finance Ministry said on Monday.
In the first three months of 2023, the price of Urals averaged $48.92 per barrel, down from $88.95 a barrel in the same period of 2022, according to official Russian data.
The price of Urals has plummeted below the G7 price cap of $60 per barrel since the group of the most industrialized nations and the EU announced their intention to set a cap on the price of Russian crude going to third countries if the cargoes are to still make use of Western insurance and financing.
Russian tax revenue from crude oil and petroleum products plummeted by 48% in February from a year earlier due to the much lower price of Russia’s flagship crude grade after the EU banned imports of Russian oil, according to Bloomberg estimates based on official Russian data.
Russia announced on Sunday that its cut of 500,000 barrels per day (bpd) – initially only for March and then rolled over through June – would now extend until the end of 2023.
Russia’s Deputy Prime Minister Alexander Novak said that Russia would cut 500,000 bpd through the end of 2023 to ensure predictability in the global oil market in a period of high volatility and unpredictability due to the ongoing banking crisis in the U.S. and Europe, the global economic uncertainty, and “unpredictable and short-sighted energy policy decisions.”
Russia’s move was matched by a surprise action from other OPEC+ members, led by Saudi Arabia and other major Middle Eastern producers, who announced a fresh combined cut of 1.16 million bpd until the end of this year on top of Russia’s output reduction.
The move aimed at “stability” was interpreted as an unwillingness of the OPEC+ group to see oil prices below $80 for an extended period of time.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.