Only marginally less expensive than the average price of Russian crude oil over the past few years is the $60 price ceiling set by wealthy nations.

The crude oil price cap for Russian crude oil that went into effect on Monday is unlikely to have a significant impact on Russia’s oil export earnings. The wealthy G7 nations decided last week to cap prices at $60 per barrel, which is roughly the going rate for Russian Urals crude oil. The price has recently dropped to between 53 and 55 dollars a barrel, which is even lower than the price ceiling.

A barrel is a unit of measurement for oil commerce that equals 159 liters.

The cost of Urals has fluctuated throughout the year, averaging around 100 euros at its highest point.

Even over a longer period of time, the price cap will have little impact on Russia’s oil profits. The average price of Urals crude oil for the last five years has been 65 euros, whereas the 21st century average price is 63 euros.

The concept behind the price ceiling is to allow western service providers, such shipping and insurance firms, to provide their services to tankers transporting Russian oil that has been sold for up to $60 per barrel.

The US administration is pushing for the price cap with the aim of simultaneously reducing Russia’s oil income, ensuring that Russian oil flows to the global market, and maintaining a low price for oil on the global market.

Negotiations on the price ceiling’s level lasted a long time, and some nations—like Poland—wanted it to be set as high as $30 to really hammer the Russian economy. The primary source of tax revenue for the Russian government is oil production.

Volodomyr Zelenskyi, the president of Ukraine, claims that the $60 price cap will not significantly hinder Russia’s capacity to invade Ukraine.

According to Zelenskyi, “It cannot be called a serious decision that Russia [öljyn] will set such a limit on the pricing, which is fairly comfortable for the budget of the terrorist state.”

Russian national finances were once sound, but they are now in deficit as a result of the war’s rising expenses and Western sanctions. Government spending in October jumped by 25% from the same month last year. If the gas corporation Gazprom had not been required to pay an additional production tax, tax receipts would have fallen by a fifth.

The governmental finances will be much more constrained as a result of the oil restrictions. The EU’s import restriction on Russian crude oil sent by sea will go into effect concurrently with the price cap. Nearly a quarter of Russia’s oil exports go to the EU; as a result, Russia needs to find other markets for its oil. It is generally accepted that Russia will have to cut back on oil production in order to partially replace EU shipments.

According to Heli Simola, a senior economist at the Bank of Finland’s Research Institute for Emerging Economies, the state’s oil revenues could be reduced by about 1,500 billion rubles, or $25 billion, in the coming year if Russia’s oil production declines roughly in line with the predictions of foreign organizations and the $60 price ceiling holds. As a result, the public sector’s deficit as a percentage of GDP would drop to 3%.

“This size of a deficit will not pose a significant challenge for Russia to finance. Russia would already have to tighten its belt more due to the unexpected decline in oil earnings “Simola posts on his blog.

Price floor Effects, such as those connected to the application and oversight of sanctions and Russia’s retaliatory actions, are still uncertain. On Monday, Russia reiterated its threat to stop selling oil to companies who set a price cap.

Aleksandr Novakin, deputy prime minister As stated by

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