IEA: "Russia's Export Revenue Decreases by 30% Due to Oil Price Cap"

[Asia Economy Reporter Lee Ji-eun] As the European Union (EU), the Group of Seven (G7), and Australia implement a price cap on Russian oil products starting from the 5th, an analysis has emerged that Russia's oil imports have decreased by about 30% compared to the previous year due to the price cap on Russian crude oil implemented in December last year.

Fatih Birol, Executive Director of the International Energy Agency (IEA), attending the India Energy Week Conference on the 5th (local time), stated that the implementation of the price cap on Russian crude oil likely reduced Russia's oil and gas export revenues by $8 billion (approximately 10 trillion KRW) compared to the previous year.

The EU, G7, and Australia are enforcing a price cap starting from the 5th, setting the maximum price for high value-added products such as diesel, which are sold with a premium on crude oil, at $100 per barrel (125,000 KRW) or less, and for low value-added products such as heating oil at $45 per barrel (56,000 KRW).

This measure aims to block Russia, which invaded Ukraine, from covering war expenses through oil sales and to stabilize oil prices. Shipping companies can only receive insurance and financial services provided by companies from the respective countries if crude oil is traded at prices below $60 per barrel.

Currently, diesel prices supplied to Europe in the international oil product market are trading around 100 to 120 euros per barrel (135,000 KRW to 162,000 KRW).

In addition, separate from the price cap, the EU has also completely banned all imports of Russian oil products starting from this day.

The EU and G7 countries have already implemented a price cap on Russian crude oil since December 5 last year, and with the expansion of sanctions starting today, they expect the effect of the price cap to be maximized.

Previously, the price cap on Russian crude oil was set at $60 per barrel (75,000 KRW). The EU estimated that the implementation of the price cap on Russian crude oil has caused Russia to incur losses of approximately $160 million per day, equivalent to 200 billion KRW.