Page 44 - bneMagazine March 2023 oil discount

44 I Special focus I One Year On bne March 2023
games with the prices assigned to a barrel of its Urals blend of crude. The price of a barrel loaded onto a ship (the FOB, or “free on board” price) at Russia’s biggest Baltic port of Primorsk has fallen to below $50 compared with the $80-plus price of Brent in recent weeks. However, according to reports, Russia has begun to add services to buyers in India and elsewhere like insurance shipping and when these costs are included the end buyer of the oil can pay an addition $25 for a barrel of Urals. As the oil price cap scheme is tied to the FOB price, Russia can export oil unimpeded, but be paid around $75 at the end of the barrels
journey – $15 more than the $60 price cap and only a $5 discount to the current price of Brent, slightly more than the traditional $2 discount Urals used to have against Brent before the war.
This assessment is supported by the fact that India reported that the discount between Urals and Brent paid for the Russian oil it was importing in November fell to nothing in November and remained zero in December. As it takes a month for oil to travel to India the effect of the oil price cap introduced that month will not be visible until January but the previous narrowing of the discount India
was getting earlier in the year suggests the discounts won’t be large.
All of this means the outlook for Russia’s oil and gas revenues remains very uncertain. While few economists expect Russia to earn the same $227bn current account surplus as it did in 2022, oil and gas revenues are also unlikely to collapse either. Elina Ribakova, deputy chief economists at IIF, who has been studying the oil business for years, estimates the current account surplus will come in at around $100bn, less than half of this year but still close to all-time highs compared to the average of the last five years.
Russia’s slide towards dictatorship drags down global democracy index
Clare Nuttall in Glasgow
Hopes that the world’s emergence
from coronavirus pandemic-
related restrictions would lead to a rebound on the Economist Intelligence Unit’s (EIU’s) latest Democracy Index failed to materialise, with the index of 165 independent states and two territories primarily dragged down by Russia’s slide towards dictatorship over the past year.
The Democracy Index measures the state of democracy by assigning scores based on five categories: electoral process and pluralism, functioning of government, political participation, political culture and civil liberties.
Countries are divided into “full democracy”, “flawed democracy”, “hybrid regime” or “authoritarian regime”.
The 2022 index shows that almost half of the world’s population (45.3%) live in a democracy of some sort, but only 8% in a “full democracy”, down from 8.9% in 2015. There are currently 24 “full democracies”, 48 “flawed democracies”, down by five since 2021, 59 “authoritarian regimes” (the same as in 2021) and 36 “hybrid regimes”, up from 34 the previous year.
www.bne.eu
The global state of democracy was relatively unchanged compared to 2021, with the global average score remaining virtually flat at 5.29 on
a 0-10 scale, compared with 5.28 in 2021. While 75 countries improved their score in 2022 – up from just 47 in 2021 – the scores of 92 countries either stagnated or declined.
Joan Hoey, editor of the Democracy Index, expressed disappointment about the overall result for the year. "There was an expectation that the index
score might rebound in 2022 because
of the ending of the pandemic-related restrictions on individual liberties,” said Hoey told a webinar on February 23.
“We did see a lifting more or less everywhere, and there were improved scores in several categories – including civil liberties and functioning of government – but unfortunately we did not return to the position and score of 2019. Other negative developments cancelled out improvements resulting from the lifting of restrictions.”