Russia sells oil at significant discounts: Novak explains how this affects war financing
11 March 14:55
The global price of oil and the cost of Russian oil currently exist in different realities. Due to sanctions and restrictions, Russia is forced to sell its oil at significant discounts, which reduces its revenues. Andriy Novak, head of the Committee of Economists of Ukraine, spoke about this in an interview with the YouTube channel "Komersant Ukrainian".
“Global oil prices and the price of Russian oil are currently two parallel worlds that hardly intersect. For several years now, Russia has been able to sell its oil exclusively at dumping prices, i.e., at very low prices,” he explained.
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According to the economist, the cost of Russian oil is significantly influenced by the willingness of individual countries to take risks and buy it despite sanctions. This is what determines the discount that Russia is forced to give.
“It’s an individual situation — how much someone is willing to risk in order to continue buying oil from Russia. And this degree of risk appetite determines the size of the discount Russia will be forced to offer in order to sell its oil in any way,” he added.
Novak also noted that Russia’s ability to earn money from energy resources is gradually decreasing due to strikes on its energy infrastructure.
“Russia now has significantly less capacity to produce, transport, process, and sell its oil, petroleum products, and gas. Therefore, even temporary relief for Russia does not mean an increase in revenue from oil sales,” he concluded.
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