Details about a potential price cap on Russian oil this week of $65-70pb are bringing us to the view that it won't have much of an immediate impact on Russia. We think the combination of the EU oil embargo and the current low Urals price will be enough to squeeze Russia's public finances in 2023. A larger deficit will require the government to maintain a tight fiscal stance, which was underlined this week by the approval of the 2023-25 government budget that aims to keep a firm grip over non-military spending.
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