With a price cap on Russian crude oil, Western states want to drain an important source of money for the Kremlin. However, the affected companies are quite adept at circumventing the sanctions – apparently earning significantly more than the cap should actually allow.
With the help of an import freeze and a price cap, Russia’s revenues in this area should be “significantly reduced”, as the EU commission announced in December. As a new study from the University of California, Columbia University and the Institute for International Finance now shows, the ruble continues to roll strongly in oil transportation.
Higher prices via detours
The plan of the Western countries should actually be quite watertight: for all those countries that are still dependent on oil from Russia, a price limit of 60 dollars (56.30 euros) per barrel (barrel) applies. This should be ensured, for example, by a ceiling on the insurance policies customary in the sector – oil transport is only permitted if this is met.
Nevertheless, the Russians sell their oil much more expensively, as the research now shows: Four weeks after the introduction of the limit, Russian companies achieved an average of 74 dollars (69.45 euros) per barrel.
China jumps in
The authors of the study have several reasons why income could hardly be reduced. To begin with, Russia has managed to divert a lot of oil to alternative markets such as China, India and Turkey. Since the price of oil had previously been at a record high, even high discounts for these states did not lead to a significant hole in the company’s cash.
In addition, Russia also benefits from the significant price differences on the oil markets. Where you actually get less than 60 dollars per barrel for the Urals, once the most important type of oil, you can get an average of 82 dollars (77 euros) for oil in Pacific ports (for example, for China).
Shadow Fleet also has an effect
The specially purchased “shadow fleet” of previously decommissioned oil tankers also apparently has a positive influence on Russia. Unlike Western shipping companies, these do not meet the sanction requirements. This is important because, according to the study, about 50 percent of Russian oil is transported by tankers.
Researchers argue for more drastic measures
According to the research, the market has been split in half – the researchers therefore see an urgent need for action and advocate for appropriate improvements to really ensure the effectiveness of the sanctions. According to the analysis, “further investigation into these transactions is urgently needed,” and they also call for more drastic action. Specifically, they are calling for some kind of task force and a “comparably aggressive” approach to oil products such as kerosene and diesel.
Source: Krone
I am Wallace Jones, an experienced journalist. I specialize in writing for the world section of Today Times Live. With over a decade of experience, I have developed an eye for detail when it comes to reporting on local and global stories. My passion lies in uncovering the truth through my investigative skills and creating thought-provoking content that resonates with readers worldwide.
