Urals-Brent differentials.

in #uralsbrentlast year

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The Urals-Brent oil price difference is still pretty large these days even as the price of oil has come down. Russia is now getting basically ~$65 a barrel. Unfortunately Russia's breakeven price is quite low compared to other countries, but they aren't making as much money off of oil as they were earlier in the year.

Their low breakeven price is however why a price cap could work at lowering Russian oil profits without lowering overall Russian oil output.

While generally price caps are anathema, this is an interesting case. Oil often has to be transported by sea on tankers that are largely insured by the West, in particular the UK. So a Russian oil price cap could be strategically accomplished. Russia doesn't have many means of redirecting their oil under such scenarios. And due to the costs of oil production and limited storage capacity in Russia they are unlikely to cease output under a price cap.