The average price for the main grade of Russian oil (Urals brand) fell below the “ceiling” for Russian oil prices set by the Western coalition. Between November 15 and December 14, 2022, the average cost of a barrel of Urals was $57.49 per barrel, or $419.7 per ton. This is stated in the message on the website of the Ministry of Finance.
The "ceiling" of Russian oil prices came into force on December 5, 2022, it is set at $60 per barrel. Thus, the Western coalition has already achieved the expected result: Russian oil is sold for $2.51 less than the established threshold. If a consignment of oil shipped from a Russian port is sold at a price higher than this value, then Western companies do not have the right to service such a supply, they are prohibited from providing brokerage, logistics, financial, insurance and other services.
In November, the average price of Urals oil was $66.47 a barrel, thus, over the two weeks of December, prices for Russian oil fell by 14.5%. In November 2021, Russian oil traded at $78.32 per barrel. The fall in the average cost of Russian oil will inevitably affect Russia's revenues. As follows from the message of the Ministry of Finance, from January 1, the export duty on oil will immediately fall by $26.6 and will amount to $16.7 per ton (-62.78%). Duties on oil products will fall with similar dynamics.
The average price of Russian oil is approaching a critical mark for the budget. As early as September, the Finance Ministry stated that the minimum acceptable oil price for Russia is $50 per barrel, but only if the country's production level remains at 11 million barrels per day. Most analysts expect a significant reduction in oil production in Russia in 2023: at the moment, daily oil production in Russia is estimated at 11.2 million, while experts expect a reduction in production up to 9 million barrels in 2023. With this forecast according to the International Energy Agency (IEA).
