Russia ignores the West and sells oil at about 30% above the newly imposed price cap

ESPO blended oil from Russia’s port of Kozmino sold at about $79 a barrel on Monday, nearly 32% higher than the $60 price cap enforced by the Western coalition. This is a retaliatory measure to curb Russia’s ability to finance a war of aggression in Ukraine. .

Refinitiv data from Reuters showed that the ESPO blend was trading in Asian markets at that price level, defying Western price caps. The world’s second-largest oil exporter, Russia, has refused to comply with the enforcement and has threatened to cut production.

Under the terms of regulations enforced by the G7 countries, the European Union (EU) and Australia, Russian oil shipped to third countries via G7 and EU tankers can only be sold at the $60 price level .

Europe sees the price cap as a firm measure to curb Moscow’s finances, as major financial institutions and insurance companies vital to the oil industry are based in the region. But Moscow has continued to oppose the sanctions, saying instead that continued restrictions would be rather harmful to the bloc.

Russia’s Deputy Prime Minister Aleksandr Novak said on Sunday that “we are working on a mechanism to prohibit the use of price cap measures, regardless of what level is set,” according to Reuters.

“We will only sell oil and petroleum products to countries that cooperate with us under market conditions, even if we have to reduce production a little bit,” he added, adding that the impact of price restrictions on countries other than Russia would not be felt. He added that it could have an impact.

European Impact, Consequences of Violations

Russia maintains that Europe will suffer from prolonged energy sanctions. Dmitry Peskov, spokesman for the Kremlin, told reporters: “Regarding the damage that sanctions are doing to European countries, that is, the sanctions that Europeans have imposed on us, it is probably an expert to hide it. It wouldn’t,” he said.

“This damage is clear. Just like the damage of sanctions to the German economy, all our experts, Brussels experts, Berlin experts, are fully aware of it.”

Price caps will be implemented from December 5, 2022 for crude oil and from December 5, 2023 for petroleum products.

If a third country vessel violates the regulations, “EU operators are prohibited from insuring, financing and servicing this vessel”. 90 days after the cargo is unloaded. According to the European Commission, Member States are subject to the consequences if it is an EU ship.

Price caps are reviewed every two months by the EU and the G7. “This review should take into account the effectiveness of the measures, their implementation, international compliance and coordination, potential implications for Coalition members and partners, and market developments,” the Commission said in a statement. says.

Naveen Aslapury


Naveen Athrappully is a news reporter covering business and world events for The Epoch Times.