Russian oil is continuing to rise, defying an increasingly redundant price cap put in place by the Group of Seven and its allies. 

Crude from the country’s western ports has rallied along with headline futures in recent days, Argus Media Ltd. data show. Russia’s flagship Urals grade is trading at $85.35 a barrel from the Baltic port of Primorsk and $86 from the Black Sea port of Novorossiysk.

G-7 officials have been long indicating that they have no intention of revisiting the cap for the time being, despite spot prices surging far above the threshold for Russian exports, which is $60 a barrel when Western shipping or insurance services are involved. The measure is designed to limit Moscow’s oil revenues while keeping the nation’s barrels flowing.

After Russia’s invasion of Ukraine its crude supplies plunged to deep discounts relative to global markets, at times trading more than $30 cheaper than benchmark Brent prices. But over the last few months, its barrels have steadily been rallying both in absolute and relative terms. 

That’s in part because the country has, in tandem with Saudi Arabia, been reducing its seaborne shipments. The curbs have had the twin effects of tightening the global crude market and boosting the premiums of precisely the type of crude that the two countries pump.

Since Urals, which shipped from Russia’s western ports, first breached the price cap in mid-July, US officials have argued that the policy has still helped to divert revenues away from battlefields in Ukraine. Russia has assembled a burgeoning fleet of shadowy tankers, which is cash that could have been deployed in the military, they argue. 

But surging crude prices are a sign that any benefits from the cap is diminishing, particularly given the continued involvement of European insurers and shipowners in Russian oil exports. 

To avoid falling afoul of sanctions, European service providers need to receive a sheet of paper pledging a cargo was purchased below $60 a barrel. Most rarely have any true insight into a shipment’s value, so many are continuing to trade into Russia despite current price levels. 

The discount for Urals stood at about $13 a barrel to Dated Brent on Wednesday. It was about $21 cheaper than the same benchmark three months earlier.