The G7 (G7) cap on offshore Russian oil prices is not low enough to cut the Kremlin’s revenues next year, according to Bloomberg analysis, and economists say even if that sends crude oil output down, Vladimir Putin still has it. a lot of money for the military, at least for now.

At $60 a barrel, “the price ceiling seems very generous,” said Sofia Donets, an economist at Renaissance Capital. “This is close to what was laid down by the market for 2023 and the level proposed in the Russian budget,” he points out to the agency.

European officials backed the restriction last week after months of haggling between the US and its allies as a means of financial pressure on the Russian war machine.

In fact, the US agency adds, the G7 made efforts to ensure that the level was not so low that the Kremlin would significantly cut production, which could lead to an increase in world prices.

Russia has yet to announce its response, but officials say they plan to continue diverting flows to countries such as China and India that have not formally signed a price cap.

Recall that Kyiv described the $60 ceiling as particularly high, citing an upper limit of $30 per barrel.

Even without the price cap—along with shipping and insurance restrictions aimed at limiting Russian trade—the Kremlin expected oil and gas tax revenues to fall by nearly 25 percent as production and some prices fell. But even with increased military spending, Russia has been able to easily cover its budget deficit with its wealth fund and borrowing in the local bond market, where sanctions leave investors with few alternatives.

According to Finam economist Olga Belenkaya, a $10 fall in oil prices from $70 per barrel in the budget could lead to a reduction in revenues by one trillion rubles (15 billion euros). But in reality, the difference is smaller, since the budget price includes costs such as freight and insurance, which are not included in the price cap.

Source: Bloomberg.