A US Treasury official dismissed speculation that Russia, faced with a set of price caps and sanctions aimed at limiting oil revenues, may be quietly earning more than reported data suggests.
“To my knowledge, there is no concrete data or conclusive evidence to support the speculation that Russia is evading sanctions by using coalition service providers and receiving payments above the threshold,” said Ben Harris, assistant secretary for policy economy of the Treasury, Thursday. according to the text of the remarks he plans to deliver in Houston.
Price data from Platts, a unit of S&P Global, suggests traders are taking an unusually large margin on shipments of Urals crude shipped from Russian ports in the Baltic region to India’s west coast, with delivery prices more than $20 a barrel higher than purchase amounts. .
Goldman Sachs analysts, in a Feb. 10 note to clients, said the effective price of Russian oil may be much higher than often reported, and that could help explain why Russian oil production has remained resilient.
The US-led coalition that has imposed the price caps has not objected to the high margins for middlemen. But if Russian revenues were higher than reported, that would undermine claims about the effectiveness of the price cap and could be evidence of price cap violations.
Buyers of Russian oil are barred from accessing Western shipping services, such as insurance, unless their shipments are priced below limits set by the US and its allies.
While Russia’s exact view on each shipment is not known, Harris said in an interview with Bloomberg News before his speech that Russia’s overall revenue from oil sales since the cap was instituted had declined, that the Russian production had remained relatively constant and that global prices had remained stable, despite what many skeptics had predicted.
“None of them are in dispute,” he said.
Moscow sparked a small rise in global crude prices on February 10 when Deputy Prime Minister Alexander Novak announced that Russia would cut output by 500,000 barrels a day next month. Brent rose more than 2% on the day to $86.39 a barrel, but has since rallied quite a bit.
Harris, in the interview, downplayed the cut, saying it had little impact on overall prices.
In his speech at a conference organized by Argus Media, Harris began on a note of caution when assessing the achievements of the price cap.
“Success remains to be seen and we continue to approach the implementation of this policy with humility,” he said.
At the same time, senior Russian officials “have openly acknowledged that the price cap is hurting their ability to finance their war and prop up the Russian economy,” Harris said.
–With the assistance of Alaric Nightingale and Jack Wittels.
