Page 21 - RusRPTJan23

record $35 discount to Brent at $55 per barrel. The deficit Russian budget for 2023 includes a Urals price of $70.1 per barrel.
2.9 Price cap and embargo strongly impact oil export volumes
Preliminary data point to a collapse in the volume of Russian seaborne oil exports in mid December. They suggest some success in meeting the price cap objective of curtailing Russia's revenues, but less in terms of keeping Russian crude on the market.
The collapse in volumes appears related to logistics including shipping shortages; we see no evidence that Russia is deliberately cutting its oil exports. Russia is still mulling its response to the EU embargo and the EU-G7 oil price cap, which came into force on 5 December, but we think Russia will seek to avoid further damage to its oil output and exports in current circumstances.
Global oil prices have barely responded to early signs of a collapse in Russian crude exports. Perhaps the worrying supply signals have been offset by weakening demand.
Although India has not joined the oil price cap, its companies are complying with it in practice because they are buying at prices below the cap. Volumes of Russian crude exports may recover somewhat in the coming weeks as more buyers from the countries that have not officially joined the cap utilise the opportunity to use EU services.
The first data on the volumes of Russian crude exports out since the EU embargo and the EU-G7 oil price cap came into force on 5 December are striking. According to Bloomberg, Russia's total seaborne crude exports plunged by 1.86 mn b/d, or 54 w/w%, to just 1.6 mn b/d in the week to 16 December. Bloomberg reports weekly flows from Russian ports using vessel tracking data.
The author of the report warns that they need to be treated with caution as flow data are affected by the weather, cargo scheduling and other factors. More precise data on December Russian seaborne oil exports will be available from the monthly IEA report, but they won't be out until mid-January.
The article also confirms that seaborne flows of Russian oil to Europe dropped to only 146 kb/d on average in the four weeks to 16 December, with Bulgaria remaining the only EU destination. Urals oil brand has recently been trading at $51-54 p/b in Europe, compared to $61-65 p/b in early December, before the above measures came into force.
21 RUSSIA Country Report January 2023 www.intellinews.com