Freight costs grew due to potential sanctions for not establishing a price ceiling - Alexander Novak
The government undertakes measures to ensure supplies to new markets
Freight costs grew due to potential sanctions for not establishing a price ceiling, Alexander Novaksaid at the President’s meeting with government members, according to the meeting transcript published on the Kremlin website.
“As for oil, the main problem is a big discount due to high freight costs. In other words, the costs of freight have grown considerably because of the risks transport operators and contractors are facing due to potential sanctions for not establishing a price ceiling,” said Alexander Novak expressing his hope for the discount to drop with time.
So, I think today the discount is posing the biggest risk. The second risk is the embargo on supplies of oil products and the introduction of a price ceiling. We will respond to these challenges, we will report and take all necessary measures to supply new markets, including logistics and transportation.
According to the Deputy Prime Minister, the contracting for February has been completed by oil companies taking into account the risks. “We will respond to these challenges, we will report and take all necessary measures to supply new markets, including logistics and transportation,” he said. The President then gave instructions to report on proposals regarding minimization of the discount on the budget.
The second risk mentioned by Alexander Novak is the embargo on supplies of oil products and the introduction of a price ceiling. “In 2022 our coal production increased by 0.3 percent despite the embargo on coal supplies to Europe introduced on August 10. Nonetheless, overall coal production increased a bit, mostly owing to supplies to the domestic market. They went up by about 8 percent, and exports fell by 7 percent,” he said.
On 2 December 2022, G7 countries and Australia imposed a price cap for Russian crude oil from 5 December 2022. The ban covers maritime transportation services for crude above the $60 per barrel. In late December, RF President signed Executive Order on special measures in response to price cap established on Russian oil. The Executive Order established that Russia bans the sale of oil and oil products to foreign companies and individuals if the contracts on these sales include the use of this mechanism directly or indirectly. The established ban applies to all stages of sales up to and including the final buyer.
Related links:
RF President signed Executive Order on special measures in response to price cap established on Russian oil >>>>
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