Russia’s crude price exceeds G7 price cap as market braces for supply crunch
View of Russian oil port Novorossiysk.
Алексей Облов | Moment | Getty Images
Spot prices of Russia’s crude oil this week surpassed the $60-per-barrel threshold of the Group of Seven’s oil price cap scheme, as Moscow and Riyadh tighten supplies.
The G7 introduced its oil price cap mechanism on Dec. 5 to retain Russian flows in the market while also limiting revenue for the Kremlin’s war coffers.
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EU imports of Moscow’s crude were banned that same month. Under the G7 scheme, Western shipping and insurance providers can offer services to non-G7 buyers of Russian crude if the crude oil is acquired at a price below $60 per barrel.
Prices for Russia’s main export crude — the heavy-sulfur, “sour” Urals that loads from the Primorsk, Ust-Luga and Novorossiysk ports — this week exceeded that threshold for the first time since the price cap mechanism was implemented.
Spot assessments from commodities pricing agency Argus show that Urals prices on July 12 reached $60.18 and $60.78 per barrel for Primorsk and Novorossiysk-loaded cargoes, respectively. S&P Global Platts meanwhile valued Primorsk cargoes at $60.32 per barrel on July 11 and Novorossiysk Urals crude at $60.26 per barrel on July 12.
Several crude oil traders — who spoke to CNBC anonymously because of contractual restrictions — attributed the spot Urals price increase to underlying hikes in global oil prices, as Ice Brent futures with September expiry settled above $80 per barrel on July 12. The latest Thursday disruptions in Libya have sustained this level.
The Organization of the Petroleum Exporting Countries and the International Energy Agency forecast surging demand in the second half of the year.
On supply, some members of the OPEC+ group — comprising OPEC and its allies — are implementing 1.66 million barrels per day of voluntary production cuts until the end of 2024. Crowning this, Saudi Arabia announced an extra unilateral decline of 1 million barrels per day in July and August, while Russia committed to cut exports by an additional 500,000 barrels per day next month.
“With less supply from OPEC+ during the demand-heavy summer months, we expect larger oil inventory declines to become visible and support oil prices,” UBS Strategist Giovanni Staunovo said in a Thursday note.
Urals values also rose as “an ongoing impasse between Turkey and Iraq, blocking some 450,000 b/d of sour Kurdish crude flow via Ceyhan is supporting sour crude values,” S&P Global Commodity Insights told CNBC by email.
Lower U.S. inflation has lightened some of the macroeconomic concerns that have been weighing on the crude complex over the year.
“The US Fed may now be able to scale back its program of interest rate hikes, even if they’re still likely to proceed with a hike in July. That has already begun to weigh on the US dollar while at the same time allowing a rally in equities. Finally, we had some pretty chunky Chinese commodity import data today for June, not least strong crude imports,” Argus Chief Economist David Fyfe said by email.
Quality over quantity
Sour crude demand has itself surged, with dwindling refinery stocks no longer cushioning the impact of lower output, one trader told CNBC. Prices for Urals crude alternatives available, such as Norway’s Johan Sverdrup and Libyan Es Sider, have spiked as a result, other traders said.
“Most Russian crude is at the heavier end of the spectrum, similar to a lot of Middle Eastern oil. Since a lot of Asian oil refineries were built to use higher density ‘heavy’ Middle Eastern material, and that is now in shorter supply because of OPEC, Russian crude has become more valuable to buyers in India, China and the rest of Asia,” said Argus Global Head of Editorial Neil Fleming.
A one-time breach above $60 per barrel for Russian crude prices might not prompt changes to the scheme price ceiling, two traders said, as G7 regulators will likely wait to see if a trend coalesces. One suggested it could push Washington to consider another crude release from strategic petroleum reserves (SPR) to mitigate price hikes, though currently low U.S. inflation might deprioritize that.
“The G7 notionally reviews the price cap every two months, with the IEA asked to provide an assessment of Russian export levels and revenues,” Fyfe said, adding that the bloc had so far been loathe to “upset the dynamic” of leaving Russian crude available while narrowing Russian revenues.
Two traders said that the hike above $60 per barrel would largely impact shipping and insurance arrangements from the so-called “grey” fleet — oil tankers, including Russian-bought vessels, that transport Russian crude bought within the confines of the G7 scheme. Another delivery alternative, they said, is the “dark” fleet — vessels that take Russian crude without investigating its purchase price and sometimes shut off their devices that emit position signals during delivery.
Russian crude and refined oil exports are already under pressure, the International Energy Agency estimated in its latest report Thursday, losing 600,000 barrels per day in June. Moscow’s export revenues sank by $1.5 billion to $11.8 billion last month, halving from the same period of last year, the IEA found.
Some Russian crude transport is unlikely to be impeded. Supply heading to key buyer India is largely insured by non-Western providers and overwhelmingly carried on Russia’s own fleet, says Kpler Lead Crude Analyst Viktor Katona.
“In case some Indian buyers become wary of transactional risks, the most likely change this is going to bring about is a change in currency. Up until now, most payments were made still in dollars, could be switched to UAE dirhams for instance (yuan would be the politically less palatable option for Indian refiners even if it, too, would provide some sort of stability),” he told CNBC.
DHL Express has more than 10,000 eSprinter vans in its global delivery fleet, but none of those have been deployed in North America – until now, that is! The company recently added 45 new Mercedes eSprinter panel vans, and they’ve got plans for plenty more!
While Mercedes offers its eSprinters with a promised 206 mile estimated range, DHL says it’s consistently seen them exceed 240 miles in stop-and-go delivery duty, making them the longest-range battery electric vehicles in DHL’s US fleet.
This extended capacity makes them ideally suited for urban logistics while expanding their potential use in longer delivery routes. The eSprinter vans also offer the same massive cargo capacity as their diesel-powered brothers, making them efficient last-mile delivery solutions that don’t compromise on payload or operational reliability.
And, of course, the eSprinter will do all of that without the noise, vibration, and harmful carbon emissions of diesel.
“Electrifying our fleet is one of the most visible and impactful ways we are moving toward a more sustainable future,” explains Greg Hewitt, CEO of DHL Express, US. “The Mercedes-Benz eSprinter brings an extended range and proven cargo capabilities that allow us to serve our customers with zero emissions, while also advancing our global goal of more sustainable logistics. These vehicles not only strengthen our operations in major US cities but also set the stage for future electric fleet growth across the Americas.”
The 45 eSprinters will see deployment in Chicago, Indiana, and Pittsburg, and will act as a first step DHL’s global Sustainability Roadmap, which will see the company electrify 66% of its last-mile US delivery fleet (and some of its long-haul fleet operations) by 2030.
Electrek’s Take
In addition to these 45 vans, DHL is electrifying its European and Asian delivery fleets, ramping up its sustainable aviation fuel use, and even exploring electric semis, eVTOL and hybrid aircraft deliveries, and more.
In short, they’re doing the right thing – or seem to be, anyway. Whether or not that commitment to decarbonization will win them more American customers remains to be seen.
SOURCE | IMAGES: DHL, via PR Newswire.
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Enphase Energy just launched a new off-grid system that lets homeowners power their homes without a utility connection – even for extended periods. The California-based Enphase says the off-grid setup delivers a seamless way to live independently from the grid while still using solar, batteries, and a standby AC generator.
A full off-grid setup
The new system combines Enphase’s IQ Battery 5P with embedded grid-forming microinverters, IQ8 Series Microinverters with Sunlight JumpStart, and a third-party standby AC generator. The components work together to supply power to a home and automatically manage energy sources to maximize efficiency and reliability.
If the batteries are drained and the generator runs out of fuel, the Sunlight JumpStart feature can automatically recharge the batteries the next morning once the sun comes up.
The IQ Battery 5P delivers 3.84 kVA of power per 5 kWh of capacity, and systems can be scaled up to 40 kWh and 15.4 kVA. That’s enough power to start big household appliances like HVAC systems or water pumps. The IQ System Controller 3G provides the backbone, managing solar, batteries, and generator inputs to deliver up to 46 kVA of off-grid power.
Smarter control and connectivity
Each system connects to the cloud through Enphase’s IQ Combiner 5C HDK, which bundles solar interconnection, communications, and metering into one box. For homes without reliable broadband, the built-in 4G LTE Cat 4 modem keeps the system online for monitoring, firmware updates, and remote support.
Homeowners can manage everything from the Enphase App – from solar generation and battery status to generator integration and load control.
Why it matters
As grid outages become more common and homeowners look for ways to gain energy independence, off-grid systems like this are becoming more appealing.
“With the launch of our off-grid solution, we are giving homeowners a reliable path to complete energy independence,” said Nitish Mathur, Enphase’s SVP of customer experience. Enphase says over 100 homes are already operating entirely off-grid using its technology. The company plans to expand availability beyond the US in 2026.
Read more: Battery boom: 5.6 GW of US energy storage added in Q2
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Global offshore wind targets are still strong enough to triple global capacity by 2030, despite the US’s offshore wind stagnation under Trump. A new analysis from energy think tank Ember and the Global Offshore Wind Alliance (GOWA) shows that the rest of the world is charging forward, underscoring confidence in offshore wind as a cornerstone of future clean energy systems.
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