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The price of Russia’s flagship crude grade, Urals, averaged $74 per barrel in August, slightly down from August 2022, but way above the G7 price cap of $60 and higher than the July average of $64.37 a barrel, according to data released by the Russian Finance Ministry on Friday.
To compare, the average price of North Sea Dated Brent was $86.20 per barrel in August.
Between January and August 2023, the average price of Urals was $56.58 per barrel, compared to an average of $82.13 a barrel for the same period of 2022, the ministry’s data showed.
August was the second consecutive month in which the average price of Russia’s Urals has exceeded the $60 price cap set by the G7 and the EU if Russian crude shipments to third countries outside the EU are to use Western insurance and financing.
In early July, the price of Urals, which had been trading consistently below the price cap, climbed above $60 per barrel for the first time, which could pose problems for cautious buyers, including India. The higher benchmark oil prices in July and, as a result, the higher price of Urals as well as the ESPO grade, could mean higher budget revenues for Russia in July and August compared to June.
At the end of July, Russian President Vladimir Putin signed into law amendments in the tax code in the energy sector which will narrow the discount of Urals crude to Brent to $20 per barrel from September from a $25 discount at the time.
The amendments in the tax code will also halve the subsidies to Russian refineries as of September 2023 to the end of 2026.
Russia also raised its oil export levy to $21.40 per ton starting on September 1—the highest level this year—as the state tries to lift oil-derived income as oil prices rise. The previous oil export duty was $16.90 per ton.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com