Russian oil is valued at $45, excluding logistics and insurance costs

Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Pravda.ru on the sharp decline in prices for Russian oil on the world market.

The main reason for the low price of Russian oil is the general decline in world prices for Brent grade. They have fallen by more than $15 in the past two months to less than $79 a barrel, - Alexey Gromov notes.

Also, the price of black gold depends on the high cost of transporting Russian oil to the end consumer, which is now located in Asia, and not in Europe, the specialist explained.

"The costs incurred by Russian oilmen for transporting oil with its insurance to India or China range from $15 to $20 per barrel," he said.

There is also a sanctions discount that Russia provides for regular customers, which brings the price of oil below $60 per barrel.

“This is how we get the same $45. However, this is not the final price at which we sell our oil, this is, in fact, the price without taking into account the costs of logistics and insurance of our oil cargo,” Gromov explained.

The expert stressed that at the moment it is rather difficult to assess the consequences of a decline in oil prices, since world prices are falling amid expectations of a global recession. If this trend continues, Russia's oil and gas revenues will decline.

“In 2023, most likely, we will return to the level of average multi-year values of previous years,” Gromov concluded.