Russia works on measures to curb discounts on its oil prices

The Russian energy ministry said on Tuesday it has been working on additional measures to limit discounts to international benchmarks on Russian oil prices, after the West imposed price caps.

Russia is the world’s second largest oil exporter after Saudi Arabia, with oil and gas sales accounting for almost half of the country’s state budget revenue.

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President Vladimir Putin last month signed a decree that banned the supply of crude oil and oil products from Feb. 1 for five months to nations that abide by the cap.

Russian oil traditionally sells at a discount to international benchmarks, such as Brent. The discount has widened following Western sanctions over Ukraine and now stands at some $25-$30 per barrel to dated Brent.

“The presidential decree published in December bans Russian companies from referring to the illegal price cap limitations in any way, directly or indirectly. This ban extends to any transactions with Russian crude oil up to the end user, which implies not working with traders who do not enforce the measure,” the Energy Ministry said in a statement.

“Details on the procedure will be published shortly as well as details on the price and discount monitoring procedures. This monitoring will be used to implement additional measures aimed at limiting the possible discount to market-based limits.”

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