Russian oil price falls below $50

According to official information from Moscow, the price of Russian oil fell further in January – to less than USD 50 per barrel (159 litres). “The average price of Ural oil in January 2023 was $49.48 per barrel,” Russia’s finance ministry said Wednesday, according to the Interfax news agency. This corresponds to almost 60 percent of the price in the same month last year.

In December, the EU and its G7 partners agreed on a price cap on Russian oil to minimize the earnings of Kremlin chief Vladimir Putin from his war of aggression against Ukraine that began nearly a year ago.

In December, the price of Russian Ural oil was just over $50 a barrel. In January, therefore, Russia was unable to benefit from the recent slight increase in world oil prices as more discounts were needed than in December. The discount compared to the North Sea variety Brent was still 38 percent in December, now it is 41 percent.

The price cap for Russian oil set by Western industrialized countries is currently $60 per barrel. So $50 is well below that. According to the newspaper Kommersant, such an oil price is a problem for the Russian state budget.

For the current year, the government expects an average price of $70 per barrel. Should Russia also have to cut oil production by 500,000 to 700,000 barrels per day because of the sanctions, as predicted by Deputy Prime Minister Alexander Nowak, the country will suffer a loss of revenue of almost 40 billion francs, according to “Kommersant”. (aeg/sda/awp/dpa)