Bloomberg reports that Russian oil is trading well below the $60 per barrel mark after the European Union and G7 imposed a price cap. The information is based on data from the independent pricing firm Argus Media Ltd.
The Urals grade, which makes up roughly 60% of Russia’s offshore exports, traded at $43.73 per barrel on Wednesday, December 7, according to analysts. In practical terms, this price sits about 27% under the cap set by the sanctions regime.
Bloomberg notes that the decline in Russia’s crude costs does not hinge solely on the cap, though the cap may still influence pricing. The report suggests the Urals price drop likely stems from multiple factors, including Moscow’s retreat from European markets, higher tanker leasing costs, and Russia’s growing reliance on buyers in Asia, especially China and India.
Meanwhile, another Russian crude grade, ESPO (“Eastern Siberia – Pacific Ocean”), which is lighter than Urals, stood at $68.72 per barrel on December 7, as per Argus. This remains below Brent, which traded at $78.50 that day.
According to Argus spokesperson Michael Carolan, the main driver behind the Urals price decline may be Russia losing European customers rather than the new price restrictions.
“Currently, the Urals have no short-term buyers, so prices must be reduced to secure long-term contracts,” Carolan stated.
Argus Media Ltd provides the benchmarks used to calculate Urals pricing and to set export taxes, influencing the Russian Ministry of Finance. It is worth noting that Western outlets have acknowledged that, in 2022, reduced transparency in Russian oil pricing eroded the accuracy of Argus and other independent forecasts, with long-term contract pricing becoming less reliable.
On December 9, after a visit to Kyrgyzstan, Russian President Vladimir Putin asserted that Russia would not lose out from the cap. He claimed the move affects the global energy landscape, not just Russia, and that the country would continue selling at current prices without budget concerns.
Putin indicated that additional steps to respond to the price cap would be outlined in a decree in the coming days. He described Western responses as misguided and harmful, arguing that non-market measures would ultimately raise prices for consumers and damage investment, with broader economic consequences.
Even before the cap took effect, prices were already easing. For instance, Urals shipments departing the Baltic port of Primorsk on November 28 traded below $52 per barrel. That figure represents the value of the crude itself plus delivery by tanker, excluding additional freight, insurance, and cargo handling costs paid separately by sellers and buyers.