Page 137 - RusRPTMar23

500,000 bpd, which is about 5% from January (9.8-9.9mn bpd).
The main stated goal of cutting production is to increase world prices so that Russia does not have to sell oil below the $60 ceiling set by the G7 countries.
In March, the ceiling will go through a quarterly review for the first time and will most likely be lowered. Market prices for the main Russian grade Urals, which are calculated by the Argus and Platts agencies and which the Russian Ministry of Finance is guided by, were below the ceiling from the very beginning. In mid-February, the Ministry of Finance announced that the average price of Urals last month was $50.51. On February 21, Platts gave the price of a barrel of Urals in the Baltic Primorsk at $44.1 per barrel, which is a discount to Brent at $38 per barrel. The authors of the price cap idea attributed this success to themselves.
But more and more experts say that the real prices of Russian oil exports are much higher, and the quotes of Argus and Platts after the reversal of Russian oil exports simply broke away from reality. Sergey Vakulenko, an independent expert on the oil and gas market, was the first to make such a conclusion. Referring to the analysis of open customs data and conversations with traders, he claims that the real discount of Urals to Brent for Asian buyers is no more than $6-10. And the difference between the $50 price shown by the Finance Ministry and the real price, which should be $70-80 per barrel, goes to the profits of trading and shipping companies associated with Russian oil majors that transport oil to Asia, Vakulenko believes. Now the government, forcibly limiting the discount of Brent to Urals to calculate taxes, wants to return this money to the budget.
The same conclusion about the real price of Russian oil was reached by five economists from major Western think tanks (including Oleg Itskhoki of UCLA and Elina Rybakova of the Institute of International Finance), who published their assessment of the impact of the EU oil embargo and price ceiling late last week. According to their calculations, the average export price of Russian oil since the entry into force of sanctions on December 5 was not $50 at all, but almost $74 per barrel. And the discount of Brent to Urals by the end of 2022 was reduced to $7, economists write. They advise the G7 to lower the price ceiling to $35 at the next meeting and to thoroughly investigate any transactions that potentially violate the restrictions.
The discount for the Russian Urals oil export blend moved up by $2.5 in January 2023 to $30.65 a barrel amid the EU embargo on seaborne oil supplies from Russia and the oil price cap, OPEC said in its February report. The Urals price was exposed to even greater pressure after the EU and G7 sanctions against Russian oil had become effective. The Urals discount against the Brent dated increased by $2.5 to $30.65 a barrel, OPEC said in the report. According to the Russian Finance Ministry, the Urals price stood at $49.48 per barrel in January 2023 ($50.47 per barrel in last December and $76.09 per barrel in 2022).
137 RUSSIA Country Report March 2023 www.intellinews.com