Russian crude from the Urals averaged $57.49 a barrel last month, below the cap.

Russian crude from the Urals averaged $57.49 a barrel last month, below the cap.

The average price of Russia’s Urals oil mix was $57.49 a barrel between Nov. 15 and Dec. 14, the Russian Finance Ministry said late on Thursday, below the Western cap of $60.

That means Western shippers and insurers from countries that have imposed sanctions on Russia over the Ukraine conflict could continue to provide services to cover Russian crude shipments without fear of sanction.

The drop from the previous month’s average price of $71.10 in Ural crude is not because the country has respected the price cap — which Moscow has called illegal while threatening to cut oil production in response — but because of the general downward trend in world oil prices over the period.

The price of Ural oil was well below $80 per barrel of the Brent international reference.

According to US Treasury guidance, the cap is free on board (FOB) prices, which do not include the cost of insurance and shipping. That’s the price at which crude would be sold if a buyer loaded it directly from a Russian terminal.

The price of Ural crude oil from the Russian Ministry of Finance, used as the basis for taxation, is calculated by the Argus price agency, which takes into account blending prices in the Baltic and Black Sea, including the cost of insurance and freight (CIF), which is higher than the FOB.

According to Reuters data, the price of Ural oil for delivery from the Black Sea port of Novorossiysk on the FOB regime is currently $48.69 per barrel.

At the CIF level it is $57.28.

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According to market sources, Urals crude has been sold at steeper discounts this month following Europe’s ban on Russian oil and the main buyer, India, has bought barrels well below the maximum price of $60 set by the West.

Since Russia sent its troops to Ukraine in February, India has become the main outlet for maritime cargoes of Ural crude.

In some operations this month, the price of Urals oil in Indian ports, including insurance and delivery by ship, has fallen about $12 to $15 per barrel from the monthly average of dated Brent, down from a discount of $5 to $8 per barrel in October and $10 to $11 in November. according to market sources.

The spread between Ural crude oil and Brent — the price of Light crude of the North Sea—,, has risen sharply since early February, when it stood at around -$1. Now it has reached -30 dollars.

The European Union, the G7 countries and Australia set a cap of $60 per barrel for Russian oil, which came into force on Dec. 5, in addition to the EU’s embargo on imports of Russian crude by sea and similar pledges from the United States, Canada, Japan and the United Kingdom.

According to analysts, the limitation will have little immediate impact on Moscow’s current oil revenues.

Oil and gas exports are forecast to account for 42% of Russia’s revenue this year, with 11.7 trillion rubles, according to the country’s Finance Ministry, up from 36% or 9.1 trillion rubles in 2021.

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