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Russian oil risks being left without carriers

13 December 2022

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the Svobodnaya Pressa magazine on whether someone else from developing countries can join the "price ceiling" for oil, and how the "ceiling" affects the current cost of Russian oil, taking into account the sharply increased freight.

According to Alexey Belogoryev, the third countries will not officially join the restrictions, as they are afraid of being left without Russian oil, but they already enjoy big discounts thanks to the "ceiling".

— Since June, almost no one has declared their readiness to join the oil price ceiling, with the exception of Norway and South Korea. The threats not to sell oil to the countries that joined this initiative, which the Russian authorities voiced, turned out to be effective. There is no special reason to expect that after six months someone will suddenly decide to formally join this mechanism.

A bigger problem for Russian companies now is the high cost of sea freight. If earlier it played a very small role in the cost of production in the region of 2-3 dollars per barrel, now in some areas the cost of freight for Russian oil has increased to 20-25 dollars per barrel. This is a sky-high value, which greatly reduces the margin of Russian companies. 

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