An oil expert breaks down China's role in crude markets as a key Russian fuel sinks far below the $60-a-barrel price cap
Over a month after the European Union and G7 imposed a $60 price cap on Russian oil, the country's Urals blend is currently trading at about. But the steep discount has more to do with China than sanctions, according to oil historian and Yale postdoctoral fellow Gregory Brew.
Before Vladimir Putin ordered the invasion of Ukraine last February, Russia stood as the world's second largest crude exporter. Over the past year, however, many nations including the US have either imposed sanctions or shunned business with Moscow to penalize the nation for its aggression."Since the war, we've generally seen Urals go for less, so
," Brew told Insider."The current drop reflects softer conditions on the market overall. There's uncertainty with the global economy and with China's zero-COVID policies."Brew noted that this remains a demand-driven story, as opposed to one centered on the West's reactions to Russia's invasion of Ukraine.
It isn't about what Russia can produce or how badly the West can crimp Moscow's revenue, he said, but rather about the global market Russia is operating in, which hinges on China's reopening plans. Whether China sees fuel demand come roaring back will hold the biggest sway over prices for Russian oil.
Meanwhile, Russia has refused to formally abide by the price cap mechanism and has threatened to retaliate, such as by
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