The price of Russia’s crude in Asia appears to be holding well above the $60 per barrel price cap set by the Group of Seven nations. Moscow is finding enough shipping and insurance capacity to meet its needs for now.
Bloomberg News reported Dec 9, under a headline “Easy Freight Helps Russian Oil Hold Above G-7’s $60 Cap in Asia,” that “some of China’s independent refiners are snapping up cargoes of Russian ESPO crude that are set to be delivered in January, according to traders. The export price of the nation’s main grade shipped from the Far East was assessed at $67.11 a barrel on Thursday [Dec. 8] by Argus Media, whose figures the Russian government has used to calculate export duties.”
ESPO refers to oil produced in East Siberia, which travels via the 4,200 km Eastern Siberia Pacific Ocean (ESPO) pipeline to the Pacific Ocean, where Russia then exports it to Asian nations.
At the December the EU-G7 announced that it had adopted U.S. Treasury Secretary Janet Yellen’s harebrained scheme that the price cap for Russian crude oil after Dec. 5 2022 would be initially set at $60 per barrel. The heart of that plan, is the EU-G7 stipulation that a shipowner or charterer that intends to transport Russian oil would have to provide an “attestation” that the oil will not be sold above the price cap.
The outcome of the price cap sanctions will be determined, in part, by what India and China do, neither of which are part of the Price Cap Coalition, and have shown no intention to join. Kpler, a data and analytics firm that focuses on trade, reports that for November 2022, China is importing from Russia 1 million barrels per day, and India is importing 0.9 million barrels per day.
The increment this year by India and China of purchase of Russian oil alone has offset more than 40% of the oil that Russia sold to the 27 nations of the EU.
Several other nations import Russian oil, in part, because they can get discounts.
The British, EU, and the United States sanctions against Russia, which they perceive as Zeusian thunderbolts, at times, miss their mark.
