Russia’s Urals crude at Baltic ports fell below the $47.60 per barrel EU price cap on Wednesday for the first time, pressured by a five-month low in benchmark Brent prices and higher freight costs, Reuters calculations based on data from traders showed.

The price of Urals on a free-on-board basis at the port of Primorsk fell to around $47.40 per barrel on Wednesday, according to Reuters’ calculations.

In July, the European Union agreed its 18th package of sanctions against Russia, including measures aimed at dealing further blows to the Russian oil and energy industry.

THE EU’S MOVING PRICE CAP

The EU imposed a moving price cap on Russian crude of 15% below the average market price. That equates to $47.60 per barrel currently, well below the $60 maximum that the Group of Seven major economies have tried to impose since December 2022.

However, the U.S. has resisted and continues to follow the $60 per barrel price cap imposed in 2022, leaving the EU with only limited power to enforce the measure because oil is largely traded in dollars, with payment clearing controlled by U.S. banks.

The EU price ceiling bans insurance and shipping services from the bloc being provided to Russian crude oil sold above the cap.

A brief drop in Urals prices below the cap does not necessarily lead to the lifting of all the restrictions, as the price of a specific cargo is typically calculated based on an average over several days or a month and Brent prices might firm again.

Urals normally trades at a discount to Brent, and prices fluctuate in line with changes in the benchmark.
Source: Reuters