Loss of trillions of dollars due to undervaluation of oil prices
Russia could have lost trillions of dollars due to the undervaluation of oil prices. The head of the St. Petersburg International Commodity Exchange, Igor Artemyev, announced the initiative to create a National Exchange Price Agency, which aims to form its own price indicators for Russian oil. This step is aimed at increasing the transparency of the pricing mechanism and improving financial revenues to the state budget.
According to Artemyev, the price of Russian Urals oil fell to 33-34 dollars per barrel in the ports of the Baltic and Black Seas, which led to a significant discount to the Brent mark, reaching 27 dollars per barrel. Prices for Russian oil collapsed, and from December 22 to 28, the cost reached its lowest level since the pandemic.
Igor Artemyev noted that international price agencies formally use declared methodologies to calculate quotations for Russian oil, however, the calculation mechanism remains unclear.
The introduction of its own price agency, he said, will not only increase market transparency but also increase tax revenues to federal and regional budgets through the collection of 'fair' taxes. Sources of information for the price agency will include:
- liquid exchange trades,
- futures market data,
- participant prices,
- over-the-counter data and
- external sources.
Impact on the Russian oil market
The creation of the National Exchange Price Agency may significantly impact the Russian oil market, as it will allow the country to gain more control over price formation and reduce dependence on international agencies. Under these conditions, Russia hopes to increase budget revenues, which is critically important in the context of economic challenges facing the country.
In the future, the successful implementation of this initiative may also change the dynamics of Russian oil trading in global markets.