The sanctions have not completely stopped the spread of Russian oil to the world, but they are forcing Russia to sell the oil at dumped prices. How much will Russian oil cost and what will be the consequences of the price drop?
Sanction pressure and the global environment are contributing to a sharp drop in oil prices for the flagship Russian brand Urals, and the consequences Focus “A gas station without a petrodollar. When will Russia be short of funds for war?”
Recall that from December 5, 2022, the EU has a ban on imports of crude oil and price limits of $ 60 per barrel for export to third countries, and from February 5, 2023, there is a ban on imports of petroleum products and price limits. While some countries, notably China, India and Turkey, continue to buy significant amounts of Russian oil, prices have already started to react to the sanctions efforts.
Yes, according to the information While the average price of Ural oil per barrel for January-April 2023 of the Russian Ministry of Finance was $51.05, it was $84.68 per barrel in January-April 2022.
As stated in the comment Focus Alexander Martynenko, Head of ICU Group’s Corporate Analysis Department, The Russian budget for 2023 includes an oil export price of $70 per barrel to achieve relatively painless deficit levels. So actually Russia currently gets less than $20 a barrel of oil..
The situation could get worse. After all, according to the estimates of Vitaly Shapran, a former member of the NBU Council, Tightening the rehabilitation screws could well cause Russian URALS oil prices to drop to $40-45 a barrel.
The fall in oil prices should lead to stagnation and decline in the Russian oil industry. However, as Vitaly Shapran points out, oil from old wells costs less, while new projects have higher production costs. Accordingly, according to Focusat an oil price of about $50 per barrel, 5% of production becomes unprofitable; 45-15%, 40-45%, etc.
Alexander Martynenko explains that the average cost per barrel (the cost of oil production in Russia) produced at the sites in Russia is about $30, which is just over $50 for promising oil production capacities. That is, already at the current price, a forced reduction in production is quite possible, and this is already happening.
So, according to Bloomberg, In March 2023, the share of idle oil wells in Russia increased from 15.6% in February to 18.1%.. Bloomberg reported that the share of inactive wells increased the most in Bashneft and Slavneft. In the case of Bashneft, which operates sites in the Volga-Ural region, the share of such wells jumped to almost 44% from 29.2% in February, according to Bloomberg.
Remember this in the comments in September 2022 Focus Gennady Ryabtsev, director of special projects at STC Psyche, warned that under the influence of sanctions, adverse processes will primarily cover regions with high oil production costs in the European part of the Russian Federation (Bashkiria, Udmurtia, Tatarstan) and the regions where they are located. raw material quality issues. However, the full effect of the sanctions Focus He did not expect before the second half of 2023.
How will the decline in the flow of petrodollars affect Russia’s ability to finance the war against Ukraine? Focus “A gas station without a petrodollar. When Russia will run out of funds for the war.”
Earlier in a comment Focus Vitaly Shapran was called the main factor in the collapse of the Russian economy.
Source: Focus
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