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Russia’s Flagship Crude Oil Falls Below the $60 Price Cap

The price of Russia’s flagship crude, Urals, has dropped below the $60 per barrel price cap for the first time in months amid plunging international benchmarks.

The price of Urals crude loaded from Russia’s Baltic Sea port of Primorsk fell to $56.15 a barrel, while the price of Urals at the Novorossiysk port in the Black Sea slumped to $56.55, Bloomberg reported on Thursday citing data from Argus Media. The data is used to inform G-7 policy on the price cap. 

Brent Crude prices fell below $75 per barrel on Wednesday, settling at the lowest level since June, amid rising U.S. oil production and inventories, concerns about the Chinese economy, and underwhelming OPEC+ cuts.

Urals crude has been trading above the price cap since July, and reports have emerged that the West is considering toughening up the sanction enforcement on evaders of the price cap on Russian oil, almost none of which has recently traded below the ceiling of $60 per barrel. 

The recent rout in the oil market has driven Urals below the price cap, for now.

The average price of Urals dropped in November from October but was still way above the Western price cap of $60 per barrel, data from Russia’s Finance Ministry showed last week.

The average price of the Urals grade was $72.84 per barrel last month, down from $81.52 a barrel in October, but higher than the $66.47 average price in November 2022, according to the data.

Despite the Urals prices holding above the price cap, Russia’s largest oil and gas exporters saw their total revenues plunge by 41% between January and September compared to the same period last year, due to lower commodity prices and lower exports, Russia’s central bank said in a financial stability review on Thursday.  

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Over the first nine months of the year, the share of Chinese yuan in payments for Russia’s oil and gas exports jumped from 13% in January to 35% in September. The share of the exports in Russian rubles remains significant – at 39% in September 2023, the Bank of Russia said.

By Tsvetana Paraskova for Oilprice.com

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