Russia has broken through the Oil Price Cap

Russia has managed to break through the Oil Price Cap, with the weekly, average Urals oil price rising to $66 / barrel versus a cap of $60.

Not only is the Urals price above the cap level, it is also $10 / barrel above the average Urals price for the seven years prior to the start of the Ukrainian war.  

The collapse of the Price Cap is also evident in the Urals discount, the difference between the Brent and Urals oil prices.  Historically, the Urals oil price has averaged about $1.50 / barrel less than Brent.  This gap widened to more than $35 / barrel in the early days of the war, but narrowed to around $23 / barrel last fall.  The Price Cap re-opened the gap to near $30 / barrel.  In the last two weeks, however, the gap has once again closed, now back to $20 / barrel, the smallest since early September.

I have criticized the price cap and the EU embargo as the wrong policy from the start -- a year ago now.  I have not changed my view.