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Russia sold 99% of its oil above the G7's price cap last month

Phil Rosen   

Russia sold 99% of its oil above the G7's price cap last month
  • Russia exported nearly all its oil at a price above the G7's price cap in October, Bloomberg reported.
  • Western sanctions seem to be having a diminishing impact on Moscow's ability to fund its war in Ukraine.

Russia was able to almost completely avoid the price cap on its oil exports in October, as the attempt by G7 countries to throttle Moscow's war revenue proves tricky to enforce.

In October, oil coming out of Russia's major ports sold for an average price of $79.40 per barrel, and 99% of Moscow's oil exports were sold above the price cap, according to a Bloomberg report and KSE Institute research.

The G7 introduced the price cap last December in a bid to both limit Russia's ability to fund its war in Ukraine and keep crude flowing on global markets. The sanctions are meant to prohibit G7 nations from providing insurance and shipping services for any oil that is sold above the $60-a-barrel threshold.

However, Russia has been able to circumvent much of the West's sanctions by turning to fleets of shadow tankers to help boost the country's oil revenue in recent months.

In October, the KSE Institute said roughly 30% of all seaborne crude was shipped with coverage from G7 and European Union nations, or were tied to other services from the West.

"This points to widespread violations of the price cap regime in the form of 'attestations fraud'," the researchers said, per Bloomberg. "This means that oil traders and brokers are likely providing falsified pricing information to G7/EU service providers."

The price cap could be enforced better and ultimately made more effective if policymakers ramped up penalties for firms or nations that violated the price cap, the KSE Institute said. The group is part of the Kyiv School of Economics, which has previously advocated for more stringent enforcement of sanctions on Russia.

Before Vladimir Putin launched the "special military operation" in Ukraine last February, Russia was the 11th largest economy in the world. It accounted for nearly 40% of the EU's natural gas imports and about 25% of its crude oil.

Now, much of Russia's economic data is impossible to verify, and experts are skeptical whether its war-time economy is surviving as well as Putin and other officials claim.

Brent crude, the international oil benchmark, tumbled more than 5% on Thursday to trade at $77 a barrel.

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