While the West has tried to limit its war money in Ukraine, Russia has made more money selling oil.
India and China snapped up the vast majority of Russia’s oil in April at prices above the West’s price ceiling of $60 a barrel, according to traders and Reuters calculations.
That means the Kremlin has seen an increase in revenue despite Western attempts to limit funding for Russian military operations in Ukraine.
G7 sources told Reuters on Monday that the price cap in the west would remain unchanged for now, although some EU countries, such as Poland, have called for the cap to be lowered to increase pressure on Moscow.
Supporters of the cap say it reduces Russian revenue while allowing oil to flow, but its opponents say it is too weak to force Russia to withdraw its activities in Ukraine.
The latest data from Refinitiv Eikon showed that Russian Urals oil cargoes loaded in the first half of April were mainly destined for ports in India and China.
So far this month, India has accounted for more than 70% of seaborne supplies of the grade, with China around 20%, Reuters calculations show.
Meanwhile, lower freight rates and a smaller discount for the Urals relative to the global benchmark pushed daily prices for the grade back above the ceiling from below the early April trading session.
India and China have yet to agree to abide by the price cap, but the West had hoped that the threat of sanctions might deter traders from helping the countries buy oil above the cap.
Urals traded at an average discount of $13 per barrel to Dated Brent at Indian ports and $9 per barrel at Chinese ports, according to traders. $10.5 and $14. For loading from Baltic Sea ports to India and China.
That means Urals crude has been trading at just over $60 a barrel free-on-board (FOB) at Baltic ports so far in April, Reuters calculations show, taking into account the extra shipping cost of around $2 a barrel.
Shipping costs have fallen sharply in recent weeks as ice conditions have eased in Russian ports and more tankers have been used.
Freight rates for Ural cargoes loaded at Baltic ports to India have dropped to $75,000-7.6 million from $8.1 million to $8.1 million two weeks ago, two traders said.
Tanker shipments from Baltic ports to China cost $10 million, down from nearly $1.1 billion a few weeks ago, they added.
During the winter months, freight rates for Ural cargoes in both India and China jumped to more than $12 million.
Traders said the lower freight rates showed that Russian oil suppliers had secured enough vessels, even over long distances.
Meanwhile, production cuts announced in early April by the OPEC+ group of oil-producing countries have also pushed up the prices of different grades of crude oil around the world, including Urals.
Ural prices at Indian ports were at a discount of US$14-17 per barrel on a DES basis in March, while prices at Chinese ports were around US$11 per barrel relative to ICE Brent.