On the methods to reduce the impact of the oil price limit

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to RIA Novosti on the possible methods to reduce the impact of the EU embargo and the proposed G7 price limit on Russian oil on the prospects for Russian oil exports.

“Now a situation has arisen in the market... we have interruptions in the supply of oil to Western markets... we could not stop oil production, extract this oil, put it in our oil storage facilities and wait for a convenient moment when it can be sold, in order to sell our oil on the market at the most favorable price in the current economic and geopolitical conditions," Alexey Gromov told the agency.

Gromov estimates that with a full EU oil embargo, Russia could lose half of its exports - 2.7 million barrels per day of about 5 million barrels of its sales. However, the delayed ban allowed Russian companies to divert much of their oil to Asian markets. As a result, the maximum loss in exports can be no more than a million barrels. "The question is whether these volumes will be in demand on the market, because now companies from China and India are enjoying a sanctions discount, and we must be ready to continue selling oil at a significant discount," the expert added.

At the same time, the analyst noted that he does not believe that most buyers of Russian oil will want to join the price limit. 

"I'm not sure that India or China will support this, because they already buy oil at a sufficient discount for themselves, and I think these countries do not want to spoil relations with Russia against the backdrop of unpredictable situations on the global energy market," he said.