Moscow wants to create a crude price benchmark by next year as the West seeks to cut profits, Bloomberg reports
Russia has stepped up efforts to create its own national oil price benchmark as part of its resistance to Western economic sanctions, Bloomberg reported Thursday, citing government and industry sources.
Russian oil is mainly marketed as Ural and Siberian Light blends. The prices of both are linked to that of Brent, the European benchmark.
The country has tried for years to launch a national benchmark based on crude trading on the St. Petersburg International Commodity Exchange, but the volume of foreign transactions on the exchange has not been high enough for this purpose.
According to Bloomberg sources, the Western sanctions campaign, which was launched after Russia began its military operation in Ukraine, and attempts to squeeze its oil export revenue with a price cap proposal, have reinvigorated the idea. The Russian government wants to have a price benchmark in action between March and July 2023, the business newspaper reported.
Discussions on the plan are in their early stages, but have been confirmed by an energy industry executive, according to the report.
The United States and its allies seek to undermine the trade in Russian crude with countries like China and India, which have refused to join the sanctions campaign, by taking advantage of their dominance in the fields of insurance and finance. According to the plan, tankers carrying Russian oil would be denied these types of services if the price of the product is higher than what Western countries allow.
The cap would apparently be at a level that would allow the trade to be somewhat profitable for Russia, but well below what it currently earns. Western nations are hoping that buyers of Russian crude will go along with the plan out of self-interest.
Global oil prices surged on supply chain disruptions and uncertainty stemming from Russia’s sanctions, allowing Moscow to make big profits despite offering deep discounts to customers.
The proposed ceiling “will give Russia a way to continue exporting oil at a price that I think would be quite profitable for them compared to locking it up,” US Treasury Secretary Janet Yellen said Thursday.
Moscow signaled it would not trade on discriminatory terms and said the US-led plan would likely backfire by driving up prices further.
You can share this story on social media: