The oil price: how Russia circumvents sanctions

Alexander Titov, Head of the Global Oil Market Research of the Institute for Energy and Finance, commented to RTVI on the oil price, and how Russia is circumventing sanctions.

Who buys Russian oil at present

India and China buy 86%-87% of our oil together. Small volumes go to Turkey. A little goes to Asian countries: Vietnam, Bangladesh, Pakistan ... But this is quite a trifle.

$60 per barrel is a limit on the price at which oil is shipped in Russian ports. But when the same American supervisory authorities look at the customs statistics of India or China, it turns out that in fact, at the port of entry, it tends to $ 80. It is clear that this is partly due to the fact, that freight, transportation costs some money. But on the other hand, for example, the price of Russian ESPO oil in the Far East is $70-$71, which is significantly higher than the ceiling.

In general, Russian companies are trying to sell oil using various schemes: through resale, through affiliated companies. They are trying, on the one hand, to comply with the ceiling, so that its cost in the port would not exceed $60. But on the other hand, you can take money for certain services - for example, for pilotage. As a result, with the help of this you can increase the margin. Such methods allow one way or another to bypass the ceiling.

It is clear that the discount against Brent still remains. But statistics show that it is narrowing. Every month, companies find new ways to improve margins. People fight for every dollar per barrel. And even one dollar is a lot of money, given that we export about 3 million barrels per day by sea.

Do China and India really get Russian oil at a big discount relative to the exchange price of Urals?

This is unlikely, because it is difficult not to notice this. One way or another, information about such a discount would be reflected in some kind of statistics.

How much does the price of oil affect the Russian budget?

2020 was a year of very high incomes. Prices soared up for gas, oil, and coal. The Russian budget received quite a lot of money. It is clear that when the ceiling on oil prices was introduced, and oil price immediately collapsed to $40 in January, everyone started talking about very large losses in budget revenues.

But it should be noted that even in January this fall can rather be called a return to the price level of 2021, when everything was not so bad in principle. We lost the windfall of 2022, but we didn't fall very far.