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The Kremlin loses $170 million a day thanks to the oil price ceiling

Jan 11, 2023

The price ceiling on Russian oil is costing the Kremlin $172 million a day. The lost profits will grow to $280 million a day when the restriction is extended to oil products starting February 5.

This is reported by Bloomberg.

A study by the Helsinki-based Centre for Research on Energy and Clean Air (CREA) provides further evidence of how the restrictions imposed by the G7 countries and related European Union sanctions are hitting Moscow. Russia’s flagship crude is already selling at less than half international prices.

“The EU’s oil ban and the oil price cap have finally kicked in and the impact is as significant as expected,” said Lauri Myllyvirta, lead analyst at CREA. 

The research organization said the EU should tighten the screws on Moscow even further. CREA said a further reduction in the cap to $25 to $35 a barrel from $60 would still be higher than production and transportation costs in Russia, but would cut the country's oil export revenues by at least another 100 million euros a day.

“It’s essential to lower the price cap to a level that denies taxable oil profits to the Kremlin, and to restrict the remaining oil and gas imports from Russia,” Myllyvirta said.

According to CREA, Russia has shipped 3.1 billion euros worth of crude oil on ships subject to the price ceiling, most of which is taxed by the government. Other measures taken along with lowering the price cap, such as stiffer penalties for non-compliance and additional sanctions on tanker sales, could cut fossil fuel revenues by another 200 million euros a day, the report said.

It should be noted that U.S. Treasury Secretary Janet Yellen said that the Russian oil price cap imposed by Western countries in December achieved its goals of keeping Russian oil on the market while limiting Russian revenues.

Author – Anastasiya Glotova, 11/01/2022

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