The latest batch of sanctions by the US and European Union have increased the discounts Russia is having to offer to sell its barrels, according to the country’s top oil official.

Deputy Prime Minister Alexander Novak told reporters in Moscow that Russian prices have seen bigger reductions relative to global prices since the most recent sanctions packages were brought into effect at the end of last year, the Tass news agency reported. 

In the final quarter of 2023, the US and the UK took their first steps in sanctioning shipowners and traders for their role in hauling barrels for Moscow, while the EU introduced more stringent requirements on the resale of ships. The bloc also introduced a more thorough documentation process for compliance with the $60 price cap it imposed alongside the Group of Seven nations and its allies. 

“The current spike is associated with the sanctions package that came out at the end of last year,” Novak said. “I’m confident that as soon as the supply chain improves and the market calms down, the discount will narrow.”

For much of last year the discounts for Russian oil fell at the point of export, and between July and October they narrowed to about $12 below global benchmark prices from $20, according to data from Argus Media Ltd. But since the middle of November, when the latest round of sanctions enforcement took place, the gap widened again to about $18 a barrel. 

Another sign that the renewed sanctions enforcement is having an impact is a growing number of Russian shipments getting stuck at sea. A handful of tankers had piled up in the Baltic Sea last week before eventually moving on, while a significant volume of vessels from the country’s eastern ports have either u-turned, paused journeys or switched off their tracking systems. 

The delivered price of Russian oil has long remained much closer to international benchmarks, and there is uncertainty about who owns the shadowy trading firms and shipowners delivering the nation’s barrels and whether much of that money ultimately funnels back to Moscow.