Zoom Image

Russian oil tanker in Pakistan's port city of Karachi: price of 60 dollars only on paper?


In response to Russia's invasion of Ukraine, Western countries imposed sanctions on Moscow – which are intended to hit the country's oil sector in particular. A price cap is intended to prevent high profits from the sale of Russian raw materials from fueling the war even further.

But the effect of these sanctions is at least questionable: Russian crude oil supplies are said to have risen sharply recently. This was reported at the weekend by the Financial Times, citing data from the analysis company Kpler.

Nearly 75 percent of the company's business in August was conducted without Western insurance, according to an analysis of shipping and insurance records by the newspaper. In the spring, it is said to have been only 50 percent. However, the Western insurance companies are supposed to enforce the oil price cap.

Profit thanks to rising oil prices

According to estimates by the Kyiv School of Economics (KSE), Russia's oil revenues have also climbed due to the rise in oil prices, with an annual increase of 15 billion dollars. The $7 per barrel price cap on Russian oil introduced by the EU, G2022 and Australia in December 60 is already likely to be circumvented in the markets.

And Russia could benefit even more in the future: The oil price has recently approached the hundred dollars per barrel mark for the first time in more than a year – also thanks to a reduction in production volumes by Saudi Arabia and Russia. Manipulated certificates for oil deliveries, in which only a lower price is officially mentioned, are also said to play a role in the profits.

According to the Financial Times, KSE economist Benjamin Hilgenstock fears that it will become increasingly difficult to enforce the price cap in view of this situation. For example, the average price of Russia's most important type of oil is now more than $60 – but that shouldn't be happening. Read here: Why the price cap on Vladimir Putin's oil is flopping.