LONDON (Business-Insider) - Larger-than-expected Russian petroleum exports could help the Kremlin reclaim the top spot as the premier global oil exporter, according to Bank of America.
Despite sanctions aimed at crippling the Kremlin’s oil revenue and limiting its ability to transact internationally, the influx of Russian oil to the global market has helped create a surplus. BofA cited three main factors for the turn of events for the Kremlin, starting first with the actual price cap on Russian crude.
First, BofA noted that the Western and European price cap was above the market price for the country’s benchmark crude product, allowing Russia to continue to rake in profit from buyers looking for cheap energy supplies. The price cap was deliberately set up that way in order to keep Russian oil on the market with the broader intention of avoiding an energy shock.
The price cap took hold in December of last year at $60 per barrel, with the Group of Seven nations as well as Australia participating.
Secondly, BofA said, ban on insurance for tankers carrying Russian crude was extended to 90 days, allowing Moscow’s crude to stay on the market for longer. Finally, Russian crude oil headed to the Middle East is now considered locally produced, allow less scrutiny over the flow of the barrels.
Meanwhile, a Tuesday report from Bloomberg said that Russian companies conducted the most drilling at oil fields on more than 10 years in 2022, which helped the Kremlin’s export rebound in the second half of last year.