TOKYO, December 26, Ksenia Naka.The effect that Western countries were counting on when introducing a price ceiling on Russian oil could not be achieved: demand for Urals in the world increased and the price periodically exceeded the threshold, said a well-informed source in the Japanese oil and gas industry.
“The kind of blow that Western countries were counting on when introducing a price ceiling on Russian oil of $60 per barrel did not happen. There are even opinions that these measures had no effect at all,” the agency’s interlocutor believes.
“I still believe that there was a certain effect, but not the one that was expected. It was hoped that the price would not rise above $60 per barrel when transported by sea, but in reality it exceeded this level. Now it has dropped lower, but previously it exceeded If there had been the result that was expected, then we could simply continue the same measures on the ceiling on oil prices that have already been introduced. Precisely because the expected effect did not happen, they are now thinking about introducing something new, some kind of then new measures,” the source noted.
He explained that out of the total volume of oil produced by Russia, 10 million barrels per year, it exports half, that is, 5 million. About half of exports are sent by sea, and the other half by pipelines, and this oil is not subject to sanctions. The sanctions applied only to the part transported by sea. What goes through the pipeline are long-term contracts, and the US government cannot influence the price; it is determined by the counterparties among themselves, the source explained.
“The sanctions consisted of not insuring and not transporting oil by tankers if the price for it exceeds $60 per barrel. But Russia began to buy used tankers and transport them with them. And now the export of Urals oil has increased. Those who «So far, India, for example, has not bought it. Indian companies buy cheaper Urals oil, process it into fuel oil, into diesel, and sell it at world prices to Europe. This is a completely legal business,» the agency's interlocutor emphasized.
«Following India, other countries began to buy. For example, the countries of the Middle East. Africa is also buying. Thus, the demand for Urals has increased. Therefore, at times the price of Urals rose above $60 per barrel, despite the price ceiling. Now it is lower, but this is due to the balance of supply and demand for oil in the world, and not because of a ceiling,” the source said.
Oil sanctions by Western countries against the Russian Federation came into force on December 5, 2022: the European Union stopped accepting Russian oil transported by sea, and the G7 countries, Australia and the EU introduced price restrictions for oil transported by sea at the level $60 per barrel — more expensive oil is prohibited from being transported and insured. In response, Russian President Vladimir Putin by decree prohibited from February 1 the supply of oil to foreign parties if the contracts directly or indirectly provide for the use of a mechanism for fixing the maximum price.
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