Russian oil price ceiling: we are talking about 60 dollars/barrel

The United States and its allies are hoping to set the trigger price level at which Russian crude will trade, people familiar with the talks told The Wall Street Journal on Tuesday. Officials are currently talking about setting this price at $60 a barrel . The group will meet on Wednesday to try to agree on prices.

The G7 plan to cap the price of Russian crude will take effect on December 5, and the EU will ban imports of Russian crude from the same date. The G7 price cap mechanism, led by the US, and the EU's outright ban have the potential to disrupt supplies of 2.5 million bpd or more of marine crude to Europe. Russia this week reiterated its threat not to supply crude to nations that will operate under this price cap, redirecting its crude to "market-oriented partners." According to Russian Deputy Prime Minister Alexander Novak, Russia may even cut production in response to the price-cutting strategy.

Last week, the G7 scrambled ahead of the fast approaching December 5 deadline. The EU regulations needed to navigate the oil markets after December 5 had not yet been drafted or finalized, pending the determination of the actual price level. We recall that reshoring will be allowed, i.e. the purchase after the Russian oil has been unloaded ashore in a third country.

The price cap plan will require all the group's buyers to purchase crude oil from Russia only if it can be purchased below a set minimum. The plan aims to limit Russia's oil revenues while still allowing crude buyers to source oil from Russia.

A $60 price cap would be nearly $30 a barrel below the current Brent price, which would translate into a good discount for any crude buyer, but it must be said that Russia currently already offers big discounts to oriental customers.

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The article Russian oil price ceiling: we are talking about 60 dollars/barrel comes from Scenari Economics .

This is a machine translation of a post published on Scenari Economici at the URL on Wed, 23 Nov 2022 11:30:35 +0000.