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Centre for Research on Energy and Clean Air (CREA): Oil Cap Price Costs Russia $170 Million Per Day.



London, Friday, 13 January 2023


Following the adoption of the G7/EU price cap on its exports, Russia has continued to sell millions of barrels of oil every day, but it is not generating as much money as it once did, according to a new research.


Russian crude oil's declining price, according to analysts at Finland's Centre for Research on Energy and Clean Air (CREA), is losing the country more than $195 million every day. The boost in sales of refined goods to Europe is helping Russian energy exporters balance that loss by around $22 million per day, but the overall impact is still in the neighbourhood of $170 million per day.


The Kremlin is worried about this decline. Dmitry Peskov, the presidential spokesperson, told state media earlier this week that "the government, first and foremost Deputy Prime Minister [Alexander] Novak, is following the situation extremely closely, as [is] the Energy Ministry."


The financial cost will be even greater when an EU ban on Russian refined products goes into force on February 5. It is anticipated that Russia will struggle to find other markets for the diesel and fuel oil it exports to Europe, and Russian refiners may need to limit throughput. By the beginning of February, these effects along with anticipated reductions in pipeline exports will reduce Russia's energy revenue by an additional $130 million.


As the largest single source of tax revenue for Russia's federal government, oil and gas will have a positive impact on Ukraine and its allies. This money is essential to Russia's invasion of Ukraine because it will pay for tanks, drones, and thousands of fresh recruits.


The financing spigot has not, however, been completely shut off. Despite a decline in export volumes and the flagship Russian Urals crude grade trading at half the price of the global Brent benchmark, Russia continues to earn an estimated $700 million daily from the export of fossil fuels.


(Source: Centre for Research on Energy and Clean Air (CREA) // Edited by: The Decision Maker – Maritime editors)


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