Russia is selling crude oil to India at prices of roughly $80 per barrel, new trading data show, roughly $20 above the capped price set by the G-7-led coalition in December and further padding Russia's coffers as its war in Ukraine drags on.
According to the data, reported by Reuters, Russia's flagship Urals grade crude is currently being sold at $80 per barrel, or 30% higher than the $60 cap imposed by the Russian price cap coalition last year. The price cap is a novel idea that was championed by Treasury Secretary Janet Yellen as a way to reduce Russia's war funding while also keeping its oil supplies on the market.
REPUBLICAN DEBATE: FACT-CHECKING CLAIMS MADE BY CANDIDATES IN SECOND GOP MATCHUP
The cap works by forbidding any coalition countries to provide maritime services to ship Russian oil unless it is sold at or below the $60 capped price. But recent data have cast doubt on the efficacy of the cap, especially in the months since Russia and Saudi Arabia announced voluntary oil production cuts of 1.3 million barrels per day.
Russian Urals exports have been trading to Indian refiners above $60 per barrel since mid-July, when the supply cuts were first announced, and have continued to climb higher on the tighter supplies.
“Urals prices are on the rise again. Alternatives are much more expensive and not easily available,” one trader with knowledge of the Russian oil market told Reuters.
In the 19 months since Russia’s invasion of Ukraine, India has emerged from the ranks of near-obscurity to become a top buyer of Russian crude. Russian imports to India have tripled in the first eight months of 2023 compared to the previous year, and its crude imports accounted for nearly half of Indian supplies in the first six months of 2023.
The Treasury Department has claimed success in its implementation of the price cap, noting in a May progress report that Russian oil revenue in the first three months of 2023 had dropped by more than 40% compared to the same period in 2022, even as its oil sales volumes have increased by as much as 10%, largely due to increased sales to India and China.
But other, more recent, data suggest Russia’s energy exports are actually earning far more than expected.
Draft Russian budget documents show that the country expects its sovereign wealth fund to increase by 40% over the next three years, exceeding pre-war levels by 2026 on the backs of higher oil and gas revenues.
The documents, obtained by Bloomberg, also show Russia expects its average prices for its Urals grade crude to reach $71.60 per barrel in 2024, well above the $60 cap.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Russian oligarch Oleg Deripaska also praised the “resilience” of the country’s economy in an interview with the Financial Times and dismissed sanctions as an inefficient tool to cut into Moscow’s revenue. Sanctions, he said, are a “kind of instrument of the 19th century.”
“It was a grave mistake of people who thought that they could use this excellent mechanism to put pressure on autocratic regimes,” he said.