After the Russia-Ukraine War that started on January 24, 2022, the European Union (EU) countries implemented many sanctions against Russia.[1] One of the most important of these sanctions was the 60 dollar ceiling price limit on Russian oil. Because, according to this sanction, a maximum of 60 dollars can be paid per barrel for Russian oil.[2] This will lead to reductions in Russia’s oil exports to EU member states. Therefore, it is seen that Moscow is looking for new markets for itself.
As a matter of fact, according to a report released in January 2023, India and China have become the largest importers of Russian oil. According to this report, Russia deployed four VLCC supertankers in December 2022 and January 2023 to export the oil it extracted from the Ural Mountains to China and India. The report noted that these tankers significantly reduced oil transport costs, especially to Asian countries. These developments significantly increased Russia’s oil exports to Asian countries using the Baltic Sea ports. As a matter of fact, as of the first fifteen days of January 2023, this oil export increased by 27% compared to December of 2022 and reached 2.8 million tons.[3]
In addition to all these, Russia’s oil exports using Primorsk and Ust-Luga ports in the first fifteen days of the year increased by 35% compared to the first half of December 2022 and reached 3.4 million tons. This figure includes Kazakhstan’s oil exports.[4] As a matter of fact, the Moscow administration directed the oil supply to the Asia-Pacific Region after the EU’s ceiling price sanction on Russian oil came into effect. It is understood from the aforementioned data that this supply also receives a serious demand from China and India.
In this context, it can be said that Russia firstly sought new countries and markets and found them. At the same time, in an environment where China and India are the biggest importers, it can be deduced that Moscow has strengthened its hand against the EU and the United States of America (USA).
Moreover, the 35% increase in exports realized through Russia’s use of the ports of Primorsk and Ust-Luga in the Baltic Sea[5] shows that Moscow has received significant feedback from the Asian market. Moreover, the 35% increase in exports realized through Russia’s use of the ports of Primorsk and Ust-Luga in the Baltic Sea shows that Moscow has received significant feedback from the Asian market. Because the ceiling price applied to Russian oil by the EU did not prevent the oil in question from going to Asia. It is also known that Russia sells the oil it exports to these countries for 45-50 dollars per barrel.[6] The fact that the barrel price of oil currently sold by Russia is below the ceiling price set by EU member states, shows that the EU’s aforementioned practice does not have a significant deterrent for Moscow.
At this point, it can be said that the increase in the trade volume between China and Russia in the oil field is also important. Because China and Russia are allies in the context of their anti-Western and multipolar quest. This alliance also enables the parties to act together. It is known that another dimension of this closeness is the petro-yuan move.
Similarly, it is known that India has come to the forefront as a state seeking multipolarity. This increases the potential of cooperation in the energy dimension in Moscow-New Delhi relations.
In addition to all these, the fact that Russia sells oil to these two states at a lower price than the EU ceiling has opened the function of this mechanism to discussion. For this reason, the EU’s agenda is to reduce the oil ceiling price.[7] This is expected to be discussed for the first time at the G7 Summit, which will be held in Hiroshima, Japan on 19-21 May 2023.[8] However, it can be said that it is difficult to make such a decision, as the further decrease in the oil ceiling price will completely stop the oil trade with Russia.
At this point, Moscow’s attitude is also important. As a matter of fact, it can be predicted that Russia will not want to depend only on China and India. In such an atmosphere, where both sides cannot completely abandon each other and many measures taken are symbolic, the future of the ceiling price application and whether it can be implemented successfully is uncertain.
As a result, the price ceiling implemented for Russian oil remains only symbolic and the price does not seem likely to fall further, leaving the future of this ceiling price application in suspense. Because, it can be argued that if oil prices remain at current wages and Russia’s market shares increase, the aforementioned application will not have a future.
[1] “Impact of EU Sanctions for European Companies in the Gulf”, Arabian Gulf Business Insight, https://www.agbi.com/opinion/james-willn-impact-of-the-eu-sanctions-for-european-companies-in-the-gulf/?gclid=CjwKCAiAuaKfBhBtEiwAht6H79jZR1GbaNisvA9KFus_sCowA4C8yO2LFOZJw78jRJdhuDoeJmESLBoC960QAvD_BwE, (Date of Accession: 28.03.2023).
[2] “EU Agrees to Set $60 Price Cap Level for Russian Oil Exports”, Bloomberg, https://www.bloomberg.com/news/articles/2022-12-02/eu-agrees-to-set-60-price-cap-level-for-russian-oil-exports#:~:text=The%20European%20Union%20agreed%20to,oil%20flowing%20to%20global%20markets., (Date of Accession: 28.03.2023).
[3] “Названы Крупнейшие Страны-импортеры Российской Нефти”, RBC, https://www.rbc.ua/ukr/news/nazvani-naybilshi-krayini-importeri-rosiyskoyi-1674001947.html, (Date of Accession: 28.03.2023).
[4] Ibid.
[5] Aynı yer.
[6] “EU Agrees to Set $60 Price Cap Level for Russian Oil Exports”, Bloomberg, https://www.bloomberg.com/news/articles/2022-12-02/eu-agrees-to-set-60-price-cap-level-for-russian-oil-exports, (Date of Accession: 28.03.2023).
[7] “EU Agrees on Price Caps on Russian Refined Oil Products”, Reuters, https://www.reuters.com/business/energy/eu-agrees-price-caps-russian-oil-products-2023-02-03/, (Date of Accession: 28.03.2023).
[8] “G7 Japan Hiroshima Summit 2023: May19th-21st”, Group of Nations, https://groupofnations.com/summits/g7-japan-hiroshima-summit-2023/, (Date of Accession: 28.03.2023).
