Russia’s average seaborne oil export price is still well above the $60 per barrel G-7 price cap, according to a group of academic researchers at Columbia, UCLA and the KSE Institute. Their calculations show that Russia sold its crude oil for about $74 per barrel on average.
G-7 is an informal grouping of seven countries: Germany, France, the United Kingdom, Italy, Japan, Canada and the USA. The nations decided to put a price cap on seagoing shipments of Russian oil to reduce Russia’s revenues, while keeping global energy markets stable through continued supplies. The cap took effect December 5, 2022.
“We find that Russia was able to redirect crude oil exports from Europe to alternative markets such as India, China, and Turkey but that export earnings were curbed substantially by the sizable discounts that Russian exporters had to accept in market segments where the impending EU embargo lowered demand,” read the report.
“However, we do not find crude oil discounts as large as those reflected in Urals prices toward the end of 2022. In particular, prices in market segments that are unaffected by lower European demand, e.g., exports from Russia’s Pacific Ocean ports, have not dropped in a meaningful way and shipments do not appear to comply with the price cap.”
The authors recommended that the price caps on crude oil should be lowered as soon as possible.