US scales Russian oil price cap plan – Bloomberg – RT Business News
Washington reportedly forced to pursue more ‘loosely controlled’ market controls
President Joe Biden’s administration has reportedly been forced to go back to the drawing board on its plan to cap international Russian oil prices, having failed to secure enough commitments to control the amount paid to Moscow for oil. essential part of its crude exports.
The United States and the European Union will probably have to make do with a « Vaguely Guarded » price cap, enforced by fewer buyers and at a higher price than expected, Bloomberg News reported on Wednesday, citing unidentified people familiar with the plans. The original aim was to drastically reduce Russia’s oil revenues – the latest effort to punish Moscow for its military offensive in Ukraine – by imposing a hard price cap at which a large “Buyers Cartel” nations would join.
Instead, only the G7 countries and Australia have committed to the price cap, Bloomberg said, blaming the failure of the initial plan on investor skepticism, financial market volatility and efforts to controlling inflation around the world. The cap level may also need to be higher than a previously targeted range of $40-$60 per barrel.
The Biden administration has denied that its plan will not be enough to limit Russian oil revenues. “The White House and administration remain focused on implementing an effective and strong Russian oil price cap in coordination with the G7 and other partners,” White House National Security Council spokeswoman Adrienne Watson told Bloomberg in a statement.
Russian officials have said the country will not sell oil or other commodities under price caps or under unprofitable market conditions. Moscow will also not supply energy to countries that adopt trade policies that contradict the terms of their existing oil and gas contracts, Russian Deputy Prime Minister Aleksandr Novak said earlier this month. A cap on crude would not be viable as prices are determined by the global balance between supply and demand, he added.
The G7 price cap is set to come into effect on December 5, along with an EU ban on imports of Russian crude transported by sea. Reuters reported last week that after Dec. 5, Russia would still be able to ship the vast majority of its oil exports at market prices, as it would have ample access to tankers and other services. The outlet quoted a US Treasury official as saying between 80% and 90% of Russian oil would continue to flow to buyers outside the cap mechanism.
Russia would have access not only to its own tankers, but also to Chinese and Indian vessels, Reuters added. Merchants and insurance companies from Russia, Asia and the Middle East would provide the necessary transactional services. Brent crude, a leading international oil benchmark, is currently selling at around $95 a barrel.
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