The West’s oil war against Russia is running out of steam

Tankers in waters near Ceuta, Spain, transfer crude oil from Russia to reach Asian markets despite Western sanctions.

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According to a new report, Russia’s oil revenues rebounded in March and April to their highest level since November last year, bolstering President Vladimir Putin’s ability to fund the Kremlin assault on Ukraine.

Analysis released Wednesday by the Center for Energy and Clean Air Research, an independent Finnish think tank, found that Russia’s revenue from oil exports has recovered from levels seen in January and FEBRUARY.

The results show that Moscow has recently managed to claw back fossil fuel export revenues despite the imposition late last year of European Union import bans and a wider fuel price cap. G7 oil.

It comes less than a week after G7 leaders said at the end of the Hiroshima summit in Japan, that a price cap on Russian oil and petroleum products was working, Russian revenues were falling, and falling oil and gas prices were benefiting countries around the world.

This is a clear indication that the app is not working.

Lauri Myllyvirta

Senior Analyst at the Energy and Clean Air Research Center

CREA energy analysts have suggested that the failure of the so-called Price Cap Coalition to revise price levels and enforce the policy has resulted in the measures’ “loss of traction, integrity and credibility”.

“The EU has failed in its commitment to review the price cap every two months to ensure that it remains below the average market price,” said Lauri Myllyvirta, senior analyst at CREA and co-author of the report. .

“It’s a clear indication that the app is not working,” he added.

A European Union spokesperson declined to comment when contacted by CNBC.

Russia’s oil revenue recovery set to continue

Russian President Vladimir Putin meets with Chief Justice Vyacheslav Lebedev at the Kremlin in Moscow on May 22, 2023.

Mikhail Klimentiev | AFP | Getty Images

“Kremlin tax revenue has closely tracked Russian crude oil prices, underscoring the importance of the oil price cap. The state is also changing its tax regime to reduce the impact of the price cap,” Isaac said. Levi, energy analyst at CREA.

“Unless the price cap coalition takes steps to lower the price cap level and close enforcement gaps, changes to Russia’s oil tax structure will force the price of oil Russian crude to approach international benchmarks, leading to another recovery in Russia’s oil revenues and a wholesale failure. of the price cap system,” he added.

CREA’s analysis indicated that since the EU import bans and G7 price caps on Russian oil, Moscow has earned about 58 billion euros ($62.5 billion) in revenue from marine oil export.

The majority of which was transported on European-owned or insured tankers, he added. Russia’s revenue could be cut by another 22 billion euros if the crude oil price cap was reduced to $30 a barrel and the price caps for petroleum products were revised accordingly, CREA said.

What is the purpose of the price cap?


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