The United States refused to cut the Kremlin’s oil revenues

Washington opposed the tightening of the ceiling on Russian energy resources

The price ceiling for Russian oil, set by the West at $60 per barrel, does not suit a number of European consumers who have not been buying “black gold” from our country for a long time. Poland and Estonia insist on lowering the threshold cost of raw materials, believing that in this way they will punish Moscow even more severely, reducing financial income from energy exports. Unexpectedly, the United States sided with Russia, saying that it is certainly necessary to lower the ceiling, but the time has not yet come for this.

Warsaw and Tallinn’s demand to lower the price ceiling for Russian oil looks rather strange. Already, export raw materials from our country are being sold well below the threshold of $60 per barrel, set by Western states on December 5th. Russia’s main export brand, Urals, traded for as little as $45 this week, while world benchmark Brent traded above $85, according to Argus Media. And this is due not only to the discounts that domestic producers have to provide to foreign buyers due to European restrictions – importers do not want sanctions to tangentially cover their economic interests. However, the main problem lies in the rapid growth in the cost of transport services: Russian companies, whose final delivery of hydrocarbons costs much more than Middle Eastern producers, are forced to discount oil directly in ports in order to make raw materials competitive with other suppliers.

Circumstances that have not arisen from a good life are already causing Russia serious financial damage to our country. As calculated by the Finnish Center for Energy and Clean Air Research CREA, due to Western sanctions on “black gold”, Russia has lost $170 million daily, and when the price ceiling for petroleum products is introduced, the amount of lost profits will increase to $280 million. As a result, our annual losses could exceed $100 billion.

The offer of Poland and Estonia caused extreme discontent in the USA. On the one hand, Washington does not seem to be opposed to dropping Russia’s export earnings to a minimum. On the other hand, the Americans believe that it is worth waiting for February 5, when price restrictions on ready-made Russian fuel will work: the maximum cost of gasoline and diesel from our country has not yet been established, and is currently being worked out by the G7 and the EU members.

“All decisions on new sanctions against Russia are made in Washington, so if the United States opposes lowering the ceiling, so be it,” said BitRiver financial analyst Vladislav Antonov. “Moreover, the level of the marginal price at which it is allowed to buy oil from Russia, starting from mid-January, can change every two months.” Therefore, lowering the ceiling, which has been working for just over a month, does not make sound economic sense. The cost of Russian export raw materials is already below the limit level approved by the West, so neither Europe nor the United States has an operational need to rush things with lowering the price limit, the expert believes.

“In addition, the States do not want oil production to decrease due to a lower price ceiling in Russia, which could lead to an increase in the cost of raw materials on the world market, negatively affect the cost of fuel at American gas stations and become a factor in increasing inflation in the United States,” – adds the head of the analytical department of AMarkets Artem Deev.

Meanwhile, the production of “black gold” at domestic deposits is still stable. According to Deputy Prime Minister Alexander Novak, oil production and export from our country in January remain approximately at the December level. Only the lion’s share of energy resources is no longer supplied in the European, but in the Asian direction. In particular, exports to China increased by 8% last year and exceeded 86 million tons (in total, about 230 million tons were sent abroad). But in the United States, commercial reserves of “black gold”, according to the Wall Street Journal, on the contrary, have long taken a course towards reduction – at the end of last year, the volume of strategic reserves of the United States fell to a forty-year low.

Nevertheless, Deev believes, there is no doubt that sooner or later the price ceiling for Russian oil will be set at a lower level. “Washington made no secret of its intention to cut Moscow’s revenues from energy sales as much as possible. Europe has declared that it is ready to completely abandon hydrocarbons from our country. Nobody doubts that the sanctions pressure on Russia will continue,” the expert is sure.

But analysts are perplexed by one curious detail. Members of the European Union, which are now actively insisting on lowering the marginal price of Russian energy resources, primarily Poland and Estonia, have not been buying raw materials in our country for a long time. “A change in the level of the limit will be accepted by all participants in the so-called “collective West”, which includes not only representatives of the EU and the USA, but also the UK, Canada, Australia, Norway and Japan,” says Mark Goykhman, Leading Analyst at TeleTrade. – Since the current proposal comes from individual and far from the most influential members of the anti-Russian coalition, such a measure is unlikely to be approved. Further developments should be expected no earlier than March, or even later. The situation with the level of the ceiling will depend on the commodity, economic and political situation that will be observed at that time.”