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A Russian state flag flies on the top of a diesel plant in the Irkutsk Oil Company-owned Yarakta Oil Field in Irkutsk Region. Picture REUTERS/Vasily Fedosenko

A Russian state flag flies on the top of a diesel plant in the Yarakta Oil Field, owned by Irkutsk Oil Company (INK), in Irkutsk Region, Russia March 10, 2019. Picture taken March 10, 2019. REUTERS/Vasily Fedosenko

Russia’s Urals Oil Hovers Above $60 Sanctions Cap

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November 21, 2023

MOSCOW, Nov 21 (Reuters) – Russian Urals oil prices bounced back above the $60 a barrel Western price cap as global prices rose and Moscow’s oil trade continued to rise despite fresh U.S. sanctions on ship owners, three traders said and Reuters calculations showed.

The U.S. Treasury Department imposed sanctions on three United Arab Emirates-based companies and three vessels last week for evading the price cap.

The cap bans Western companies from providing maritime services, including insurance, finance and shipping, for Russian seaborne oil exports sold above $60 a barrel.

Calculated FOB (free on board) estimates for Urals oil cargoes loading from the Primorsk and Ust-Luga Baltic ports in December were up to $61-63 a barrel on Tuesday, Reuters data showed.

The rise in daily Urals oil prices above the cap does not automatically mean market players have breached sanctions because the price for a particular deal is normally calculated on the basis of average prices over a given period.

If international prices fall, the actual price of the deal could still be below the cap.

Russian Urals oil last week fell below the price cap limit on weaker Brent crude prices and higher freight rates.

Meanwhile, Russia’s oil exports continued uninterrupted despite a decline in the number of ship owners involved in the state’s oil trade after recent U.S. sanctions, the three traders said.

“We foresee a possible shortage of ships for Russian oil, but so far no one has faced an issue finding a vessel,” one of the traders said.

Freight rates for Russian Urals oil this week rose to almost $10 million per vessel per voyage from Baltic ports to the west coast of India, up from about $8 million earlier in the month and $5 million in September, two traders said.

One of the traders said $11 millions had been paid recently for one ship on the Russia-India route.

(Reporting Reuters’ Moscow reporters, additional reporting by Florence Tan in Singapore and Editing by David Goodman)

(c) Copyright Thomson Reuters 2023.

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