Breaking the Ceiliing

Oil still remains the main source of export earnings for the Russian Federation.

Judging by the report of the International Energy Agency, the actual weighted average price for Russian Urals oil (export by sea) under contracts implemented in July 2023 broke through the price ceiling set by the G-7 countries.

This price was $64.41 per barrel, the highest in the last 8 months.

Russia’s revenue from offshore exports of oil and petroleum products in July amounted to $15.3 billion (almost 20% more than in June).

Please note that IEA estimates are based on the so-called free-on-board (FOB) price, which excludes shipping and insurance costs.

And Russian exporters have restructured their business: they seek to “hide” revenues exceeding the ceiling in the inflated cost of freight and insurance. To do this, they either control the tankers themselves or enter into additional deals with their owners.

Despite the increased price, the physical volume of exports and, accordingly, the volume of foreign exchange earnings in 2023 remains approximately 20% lower than last year.

But this estimate, based on visible official statistics, does not take into account the revenues hidden in the ever-growing hybrid and gray trading operations, the scale of which cannot be estimated.