The EU ban on Russian oil and the $60 per barrel price cap is costing the Kremlin over $170 million a day, think tank says
- Russia is losing $170 million a day after the latest round of western energy sanctions, according to one think tank.
- The hit is the result of the EU ban on seaborne oil imports and the $60 per barrel price cap.
The European Union ban on Russian oil and the west's $60-per-barrel price cap is costing the Kremlin over $170 million a day, according to the Centre for Research on Energy and Clean Air.
The Finland-based think tank estimated that Russia's crude oil exports fell 12% in December. The nation's revenue from crude oil plunged 32%, largely due to the latest round of western sanctions. Last month, the EU officially banned seaborne oil imports from Russia and slapped a $60 price cap on Russian crude. The sanctions prevent Russia from using western shipping and insurance services when moving its oil through global markets.
Those restrictions have hampered sales of one of Russia's most profitable exports. The nation lost $15 million in oil export revenue in the last week of 2022, Bloomberg reported, with just China, India, and Turkey being among the few buyers left.
Those allies have also been able to demand heftier discounts on Russian crude with the price cap in place. Russia's flagship oil product is now trading well below the $60 price cap, selling to nations like India, despite earlier vows that Russia would stop business with nations that supported the price cap mechanism.
CREA estimates that headwinds related to energy sanctions are costing Russia €160 million, or $170 million a day, the organization said in a report published on Wednesday. It added that losses could even rise to €280 million, or $300 million a day by February 5, when the EU is expected to ban Russian petroleum products.
The blow to Moscow's budget could mean a sooner end to Russia's invasion of Ukraine, particularly if the west ramps up trade restrictions on the already heavily-sanctioned nation. The report suggested methods like revising the oil price cap down to $25-$35 a barrel, increasing punishment for ships that violate the price cap, or adding trade restrictions to Russian pipeline oil.
"The EU has taken massive steps over the past year to cut off its dependence from fossil fuel imports from Russian and cut off financing for the Kremlin's unprovoked and illegal assault against Ukraine and Europe," the think tank said. "Further cuts to the Kremlin's revenue will therefore materially weaken the country's ability to continue its assault and help bring the war to an end.
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