Russia has no problems selling oil despite sanctions, price caps, Deputy PM says
Russian oil producers have had no difficulties in securing export deals despite Western sanctions and price caps, Russian Deputy Prime Minister Alexander Novak told a televised online government meeting on Wednesday.
"We've been in constant contact with the companies, the contract making for February has been completed, and on the whole, the companies are not saying they have problems as of today," Novak told the meeting led by President Vladimir Putin.
Russian oil production has so far shown resilience in the face of the sanctions, imposed after Moscow sent troops into Ukraine on Feb. 24, and of the price caps, introduced by Western countries last month.
Keep updated, follow The Business Standard's Google news channel
Putin last month signed a decree that banned the supply of crude oil and oil products from Feb. 1 for five months to nations that abide by the cap.
Novak said the main problem for Russian oil was a high discount to international benchmarks as well as rising freight costs.
Russian oil traditionally sells at a discount to international benchmarks such as Brent. The discount BFO-URL-NWE, BFO-URL-E has widened since the imposition of sanctions and now stands at some $25-$30 per barrel to dated Brent LCOc1.
"But I hope that the situation will be temporary and it (discount) should decrease over time, as we saw in 2022," Novak said.
Putin, who has long advocated the idea of reversing the price differentials in favour of Russian oil, told Novak that the state budget should not suffer as a result of the discount.
STABLE ECONOMY
Putin struck an upbeat tone about the wider Russian economy.
"We can state with assurance that the financial and banking system of the country, the economy as a whole, is in a stable state, and is actively developing," Putin said. "We have every reason to believe these tempos will be maintained in 2023."
Russian Economy Minister Maxim Reshetnikov told the meeting that domestic inflation was 11.9% in 2022. He said inflation was likely to be substantially lower by the end of the first quarter, with the second quarter figure below the targeted 4%.
