Russia circumvents G7 price caps on most of its oil – FT

Russia has managed to avoid G7 sanctions on most of its oil exports. The Kremlin's revenues from raw materials are growing.

This was reported by the Financial Times.

According to the newspaper, the steady rise in crude oil prices since July to more than $95 per barrel, combined with a decrease in the discount on its own oil, will lead to the fact that the Kremlin's oil revenues in 2023 are likely to be at least $15 billion more than they could be.

According to the FT publication analyzing transportation and insurance data, in August, almost 75% of all marine oil shipments from Russia were carried without Western insurance, up from about 50% this spring.

The increase means that Russia is becoming increasingly adept at circumventing the $60 per barrel oil price cap set by the Group of Seven nations, allowing it to sell more of its oil at prices close to those of the international market and dealing a blow to Western attempts to limit Russia's oil revenues, which have made up a major part of the Kremlin's budget since the invasion of Ukraine.

Although Russia's oil sector continues to face serious challenges, including reports of a shortage of domestic oil products and an overall decline in exports, the figures still suggest that Vladimir Putin's military budget will receive more oil revenues, the FT concludes.

It is worth noting that the G7 mechanism allows third countries to buy Russian fuel using Western ship insurance if there is evidence that the purchase does not exceed the price limit of $60 per barrel of crude oil, $45 per barrel of heavy fuel and $100 per barrel of light fuel such as gasoline and diesel.

The idea was put forward by Washington to cut Moscow's revenues amid its war with Ukraine while avoiding market disruptions due to the EU's ban on Russian oil.

Author – Anastasiya Glotova, 25/09/2023