Page 9 - RusRPTFeb23

2.0 Politics
2.1 G7 to introduce dual price cap scheme on Russia’s
refined product exports in February
The G7 plans to establish two price cap schemes on the import of Russian oil products that are due to come into effect on February 5.
The second part of the oil price cap scheme that
is due to come into effect in a few weeks as part of the sanctions against Russia, will be twofold, the G7 Finance Ministers said on January 10.
One price will be set for diesel and kerosene, which are more expensive than crude oil, and the other for cheaper oil products, such as fuel oil.
Russian exports of refined products are much more widely distributed to customers in Europe than crude exports that largely go to countries with large refining capacities connected to the Soviet-era Druzhba oil pipeline network, such as Germany in the eastern part of Europe.
The distinction has been made between diesel and kerosene as Europe remains much more dependent on supplies of these Russian fuels thanks to Russia’s very large refining capacity. Diesel supplies in Europe are already under pressure thanks to the previous sanctions and self-sanctioning on the export of Russian fuels.
According to Bloomberg, the specific price cap rates are still being negotiated. It is noted that the G7 is encouraged by the result of the price cap on Russian oil, which has collapsed the price of Urals since its introduction on December 5 and seen volumes of crude exports tumble by half.
The Russian budget deficit in December 2022 increased by RUB400 trillion compared to forecasts and exceeded RUB3 trillion, largely as a result in the fall of both the price and the volumes of oil exports, according to a report made by Russian Finance Minister Anton Siluanov this week to the Duma.
There is no official data on oil and gas revenues for December, but their decline was inevitable due to the collapse in Russian oil prices against the backdrop of the EU oil embargo coming into force on December 5.
As the Ministry of Finance itself reported on January 5, that in December 2022 Russian Urals oil cost an average of $50.47 per barrel - 1.4 times cheaper than in December 2021 ($72.7), and 1.5 times cheaper than the average in 2022 ($76.7).
The first month of the European embargo on Russian oil has not yet been marked by an increase in world prices: a barrel of Brent now costs the same $80 as in early December. At the same time, Russian oil continues to get
9 RUSSIA Country Report February 2023 www.intellinews.com