Average price of Russian Urals crude fell last year, but remained above the sanctions cap

The average selling price of Russia’s key Urals crude fell last year to 62.99 dollars per barrel from 76.09 dollars per barrel the previous year. It was therefore slightly above the price cap of 60 dollars per barrel imposed on Russian oil by Western countries. Reuters reported this today, citing data from the Russian Finance Ministry.

The ministry also said that in December the average price of Urals crude rose to 64.23 dollars per barrel from 50.47 dollars per barrel a year earlier. At the beginning of this year, however, the price of Urals crude fell below the price cap, to around 55 to 56 dollars per barrel, according to Reuters data.

The G7, Australia and the European Union introduced a maximum price of 60 dollars per barrel for Russian oil transported by sea in December 2022. If this limit is exceeded, transporting the oil and insuring its transport are prohibited. The Western countries’ agreement on a price cap for Russian oil aims to limit Moscow’s revenue for financing the war in Ukraine, while also preventing a significant drop in Russian oil supplies to the global market, which would harm Western countries too.

Russia was forced to cut oil exports immediately after the price cap was introduced because it had difficulty securing enough ships to transport the oil. It later managed to meet most of its transport needs using carriers that do not require Western insurance. Traders have warned, however, that Western sanctions have multiplied costs for Russian oil exporters, Reuters reports.

Russian Deputy Prime Minister Alexander Novak said at the end of December that almost all of Russia’s oil exports last year went to China and India. According to him, Europe’s share of Russian oil exports fell to around four to five percent, from approximately 40 to 45 percent before the war in Ukraine.

A drop in the price of Urals crude below the price cap could attract interest from Western buyers and carriers, traders say. “The Russian oil market is large. Western companies have no problem operating there if it is legal—that is, if the price is below the set cap,” one trader told Reuters.