Russian officials and oil producers are in talks to create a global benchmark for Russian oil. The initiative was spurred on by talks about capping Russian oil prices, Bloomberg source said.
Russia plans to create its own national oil benchmark in an attempt to ease Western sanctions and avoid a possible price cap on Russian oil.
Russian President Vladimir Putin smiles during a meeting with the Secretary General of the Organization of the Islamic Conference (OIC) Ekmeleddin Ihsanoglu in the Moscow Kremlin on June 7, 2006. REUTERS/Shamil Zhumatov
Russian officials said the country’s oil suppliers and its central bank have begun talks to launch a national oil trading platform this fall, Bloomberg reported. The trading platform should attract enough buyers so that by mid-2023 Russian oil will become a benchmark, along with WTI oil and Brent oil in the global commodity market.
Russia has been trying – and so far unsuccessfully – to set a benchmark for its Urals oil for the past 10 years, but the idea has become more attractive to its producers and politicians after a flurry of sanctions hit the country from the US and Western countries making plans. to limit the price of Russian oil.
Recent discussions point to Western plans to cap the price of Russian oil in the $40-$60 range, though Russian officials have made it clear that such an adventurous offer is absurd and will „fail” and lead to retaliation, causing oil prices to jump even higher. According to analysts, if this happens, oil could cost up to $150 per barrel.
The country is now looking to sell as much oil as possible without any restrictions, two people familiar with the matter told Bloomberg. One source added that the decision to introduce an oil benchmark was partly prompted by ongoing price cap negotiations at the G-7 summit earlier this month.
For the new benchmark to be recognized globally, Russia must sort out any necessary legal framework before launching the platform, which the government has yet to do, according to a document leaked to Bloomberg. The trading platform will also need to accumulate a fairly high trading volume, something the country has not been able to do in the past on other commodity exchanges.
But Russia can do it. Despite the fact that the Russian Federation offered its allies big discounts, the country received almost $100 billion in fuel export revenue in the first 100 days of the start of the special operation in Ukraine and received $24 billion from Chinese and Indian buyers alone in the first three months of the NWO.