Russia Has Sold Most of Its Oil Well Above the West's Price Cap

Russia has succeeded in selling almost all of its oil well above a Western-imposed price cap of $60 per barrel, a Russian government official said Thursday.

The European Union, G7 countries, and Australia introduced the price cap on Russian oil last December, aiming to curb Russia's ability to finance the war in Ukraine.

"Even unfriendly countries note that the so-called price cap has not worked. More than 99% of oil traded well above the $60 per barrel ceiling," Vladimir Furgalsky, a Russian Energy Ministry official, told a roundtable discussion at the upper house of parliament.

Russia was forced to cut exports of oil and oil products immediately after the price cap was introduced as it struggled to find enough ships to transport all of its output.

But it then managed to place most of its exports with domestic or non-Western foreign shippers, which do not require Western insurance coverage.

VEB FORECASTS

According to Russian state bank VEB, which presented its own forecasts at Thursday's event, Russian oil exports are seen at 242 million metric tons (4.84 million barrels per day) this year, down from 248 million tons in 2022.

In 2024, Russian oil exports are little changed, at 241 million tons, VEB said.

Andrei Klepach, VEB's chief economist, said Russian pipeline gas exports to Europe would continue to sharply decline — to 16 billion cubic meters (bcm) this year from some 56 bcm in 2022, and from around 130-140 bcm previously.

"And its [exports] won't recover. Until our relations change radically, but this is definitely in a very distant future," said Klepach, adding it would be impossible to offset falling Russian gas exports by increasing supplies to China.