Ural oil, which the Kremlin mainly exports to other countries, is sold at a low price because the European Union prohibits its importation by sea. But the Kremlin wants to make money, not lose money on the embargo floor.
Russia plans to revise the taxation of oil companies to increase government revenues by taking a larger share of crude oil sales. According to the Financial Times report dated March 22, 2023, its cost often exceeds the “ceiling” set by the G7 countries.
It was noted that starting in April, the Kremlin will switch to an indicator linked to the international crude oil standard, Brent, to calculate oil export taxes. By reducing the market discount on Russian oil, Russia plans to generate an additional 600 billion rubles ($8 billion) annually.
The Financial Times writes that Russian President Vladimir Putin first mentioned the planned reforms at the end of February 2023. According to journalists, the changes reflect the growing cloud of the sanctioned Russian oil market and the competition between the Kremlin and the oil-producing potential additional sales revenue.
The dispute highlighted the pricing of Russian oil and whether the international criteria the Kremlin uses as a basis for taxation are in line with recent market developments.
At what price do the Russians sell their oil?
Russia’s main export class, the Urals, is sold in: 40 dollars Brent per barrel is below oil as the EU bans imports by sea. At the same time, according to the Financial Times, Russian producers of “black gold” sell some of their gold at a higher price.
According to customs data, the post-embargo average price of all Russian oil blends exported in December was about $74 per barrel. This is just $10 below the Brent price over the same period and well above the upper limit. 60 dollars
But the average of the price of the Urals, which is Russia’s main reference point for calculating the tax, is only 43 dollars same month
Recall that the oil embargo on offshore oil supplies from Russia to the EU came into force. December 5, 2022. The ceiling price of Russian oil was set at $60 per barrel.
It was also reported that a secret fleet of 600 tankers transported Russian oil around the world. CNN reporters learned that the Kremlin uses front companies in Dubai and Hong Kong. Tankers are bought in Europe or use old ones that would otherwise go for recycling.
Source: Focus
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