Russia considers a “Price floor” to counter the “Price Cap” on oil
The G7-imposed oil price cap went into effect on Monday, but Russia's response is to consider setting a "floor price" for its crude exports, two officials told Bloomberg on Tuesday. of Moscow. That is, Moscow would still refuse to export oil below a certain price. This would block a slice of the market.
Russia had already said it would not ship crude to anyone who agreed to the G7 price cap and that it could respond by cutting oil production rather than ship its crude at too deep a discount, as the price cap stipulates.
The price limit of the G7 was set at 60 dollars a barrel and Russia currently sends cargoes even at that price, thus also being able to use Western ships, but this has not prevented Moscow from threatening a production cut.
The G7 price cap was ostensibly created to limit Russia's revenue from crude sales, but if Russia were to limit production in response to the price cap, as it has said it would, oil prices could rise, negating even more efforts to limit Russian revenues as what Russia calls its special military operation in Ukraine continues.
The EU and the G7 have said they will review the cap every two months, with the first review in mid-January. Furthermore, this ceiling will be followed in February by similar limits concerning petroleum products, even if their level remains to be defined and Europe is heavily dependent on products distilled from Russian refineries. The risk is that price caps will turn into real chaos on global oil markets.
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The article Russia considers a "Price floor" to counter the "Price Cap" on oil comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-russia-considera-un-price-floor-per-contrastare-il-price-cap-sul-petrolio/ on Wed, 07 Dec 2022 09:00:58 +0000.