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Russia’s government is watching Russian crude oil price trends closely after reports that its flagship crude currently trades at around half the price of the international benchmark, Kremlin spokesman Dmitry Peskov said on Tuesday.
“The government, first of all Deputy Prime Minister [Alexander] Novak, is watching the situation very closely, as [well as] the Energy Ministry,” Peskov said, as carried by Russian news agency TASS.
Vladimir Putin’s spokesman was asked if the Kremlin was concerned about the very low prices at which Russia’s Urals is trading and the consequences for Russia’s budget income.
Urals, Russia’s flagship crude grade, was going for $37.80 a barrel at the Baltic Sea port of Primorsk on Friday, half the Brent Crude price on the same day, Bloomberg reported on Monday, citing data provided by Argus Media.
Russia is also “keeping a very close watch” on the situation after the presidential decree in retaliation to the price cap on Russian oil, Peskov said today.
At the end of December, Russian President Vladimir Putin banned the sale of Russian oil to countries that have joined the so-called Price Cap Coalition and comply with the cap imposed by the Western countries. The Russian move was weeks in the making and follows the start of the price cap mechanism that the G7, the EU, and Australia implemented on December 5.
The EU and G7 banned maritime transportation services from shipping Russia’s crude oil to third countries if the oil is bought above the price cap of $60 per barrel, and the EU imposed an embargo on seaborne imports of Russian oil into the bloc.
Putin’s decree bans the sale of Russian oil to countries that comply with the price cap and will be in effect from February 1 to July 1, 2023.
Russia has the right to respond to “illegal measures” as it sees fit, Putin’s spokesman Peskov has said.
Moscow claims the price cap will not seriously hit its oil production and economy. Russia’s oil production will not fall off a cliff now that the EU-G7 price cap on Russian crude has come into effect, Russia’s First Deputy Energy Minister Pavel Sorokin said last month.
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.