National Oil Standard
Russia’s leading ministries, domestic oil producers and the Central Bank plan to start trading on the national benchmark (oil benchmark) in October next year. informs Bloomberg cited a document that was at the editors’ disposal. According to the plan, Russia will work to attract foreign partners to buy reference oil in March-July 2023 to ensure adequate trade volume and price control.
The article states that Russia has been trying to establish its own benchmark for more than a decade, as its trade volumes are not high enough to form a generally accepted benchmark.
The country’s ambitions increased after the invasion of Ukraine triggered a series of Western oil sanctions. And last month, the G7 countries agreed to urgently explore how to limit Moscow’s oil revenues by setting a ceiling on oil prices.
They added that the Urals, the main export grade of crude oil from Russia, is often traded at a price expressed as a discount to compare Brent oil in the North Sea. But after the start of military special operations, this discount increased significantly, as the sanctions reduced the attractiveness of the Urals.
Bloomberg also reported that two Russian officials, who asked not to be named, confirmed the ongoing work on the national benchmark oil. According to them, Russia wants to “guarantee the possibility of selling its oil without any external pressure or restriction.”
In the article, “One of the officials said that the “G7” proposal once again proves the need for an independent Russian benchmark.
The head of the Russian oil company, again on condition of anonymity, confirmed to the agency that negotiations with domestic oil producers are ongoing.
“According to the document, the proposal is still at an early stage and government officials have yet to determine whether the country needs any additional legal frameworks for the reference oil trade,” the authors of the material said.
The “ceiling” of Russian oil prices
July 6 Bloomberg reportedThe US, together with its allies, is discussing a “ceiling” of the marginal price of Russian oil between $40 and $60. The G7 countries agreed to consider options for limiting the cost of fuel from Russia at the summit in late June.
According to one of the publication’s sources, management representatives of US President Joe Biden are trying to implement it by holding several meetings a week about the price ceiling.
One of the problems, according to the article, is that the price cap mechanism would require the EU to lift some of the sanctions the bloc agreed to in early June. Without it, the United States fears that by the end of the year, the cost of fuel will again rise sharply – by some estimates – to $185 a barrel.
It is also stated that despite the refusal of some states to supply oil, Russia still receives more than $600 million a day from oil sales. The Russian Federation only increased exports to other countries.
Russian Foreign Ministry spokeswoman Maria Zakharova said on July 14 that the G7’s plans to set a ceiling on Russian oil prices could lead to higher oil prices.
“If the Group of Seven tries to implement its own plans, which we can call adventurous plans, to create a certain ceiling in oil prices, it may increase from this, as economists say. Because these plans are anti-market, adventurous and voluntary,” Zakharova said at a briefing.
Dmitry Birichevsky, Head of the Department of Economic Cooperation of the Russian Ministry of Foreign Affairs, shares the same opinion.
“Of course, Russia does not have to accept such plans. As a result, the energy crisis will worsen, and a further rise in stock prices will follow. Russia, like the entire civilized world, will continue to adhere to the principles of the market and supply oil and oil products to countries that are ready to buy them, ”said he.