Russian oil: Moscow “will not accept” the price cap

L’agreement sealed by the countries of the EU, the G7 and Australia around a cap on the price of Russian gas does not pass with Moscow. “We will not accept this ceiling,” Russian presidential spokesman Dmitry Peskov told the press, quoted by Russian agencies. However, he said that Moscow had “prepared” upstream “for such a ceiling”, without giving further details. This agreement aims to limit the means of Moscow allocated to the financing of its offensive in Ukraine.

On Friday, the 27 countries of the European Union, the G7 and Australia had agreed after weeks of discussions on “a maximum price of 60 US dollars for crude oil of Russian origin transported by sea. “, according to the terms of a joint press release. Russia’s economy “will be destroyed, and it will pay and be responsible for all its crimes”, had indicated on Telegram the chief of staff of the Ukrainian presidency, Andriï Yermak, according to whom “it would however have been necessary to lower (the ceiling price ) to 30 dollars to destroy it more quickly”.READ ALSO energy wars

The mechanism is expected to come into effect on Monday

The price of a barrel of Russian oil (crude from the Urals) is currently fluctuating around 65 dollars, barely above the European ceiling, implying a limited impact in the short term. US Treasury Secretary Janet Yellen, however, welcomed the announcement, which “is the culmination of months of effort by our coalition”. The agreement was made possible by the consensus reached on Friday by the 27 of the European Union. The finance ministers of the G7 countries had agreed in early September on this tool, designed to deprive Russia of financial means.

The mechanism will come into force on Monday “or very soon after”, specify the G7 and Australia. It is indeed Monday that the EU embargo begins on Russian oil transported by sea. Thus, only oil sold by Russia at a price equal to or less than 60 dollars can continue to be delivered. Beyond this ceiling, it will be prohibited for companies to provide services allowing maritime transport (freight, insurance, etc.).READ ALSOEnergy: “The Ukrainian crisis is the straw that broke the camel’s back”

Currently, G7 countries provide insurance services for 90% of global cargo and the EU is a major player in sea freight – providing a credible deterrent, but also a risk of losing markets to competitors. Russia, the world’s second largest exporter of crude, had for its part warned that it would no longer deliver oil to countries that would adopt this cap. Without this ceiling, it would be easy for him to find new buyers at the market price.

“The EU remains united and stands in solidarity with Ukraine”

“We will be ready to review and adjust the maximum price if necessary”, assure G7 and Australia in their press release. And a ceiling should also be found for Russian petroleum products from February 5, 2023. The European embargo comes several months after the one already decided by the United States and Canada. But Westerners also have to deal with the interests of powerful British insurers or Greek shipowners.

READ ALSOGas: how Europe fell into Putin’s trap

“The EU remains united and stands in solidarity with Ukraine”, welcomed the Czech Presidency of the Council of the EU in a tweet. Russia has earned 67 billion euros from its oil sales to the EU since the start of the war in Ukraine, while its annual military budget amounts to around 60 billion, recalls Phuc-Vinh Nguyen, an expert on energy issues at the Jacques-Delors Institute.

READ ALSO“Russian disinformation on shale gas has worked”

The instrument proposed by Brussels plans to add a limit set at 5% below the market price in the event that Russian oil falls below 60 dollars. In fact, some experts fear a destabilization of the world market and wonder about the reaction of the producing countries of OPEC, which meet Sunday in Vienna.

“We are in the unknown”

“This cap will help stabilize global energy markets […] and will directly benefit emerging economies and developing countries ”, since Russian oil can be delivered to them at prices below the ceiling, on the contrary assured on Twitter the President of the European Commission, Ursula von der Leyen.

READ ALSOGas, inflation… Europeans are preparing for the storm

Effective Monday, the EU’s embargo on Russian oil by sea will cut two-thirds of its crude purchases from Russia. Germany and Poland having also decided to stop their deliveries via an oil pipeline by the end of the year, total Russian imports will be affected by more than 90%, say the Europeans.

READ ALSOGermans urged to save energy at home, on the road and at work

On the other hand, “an oil price ceiling has never been seen. We are in the unknown, ”says Phuc-Vinh Nguyen, stressing that the reaction of OPEC countries or big buyers like India and China will be crucial. The only certainty, according to him: a cap, even at a high price, will send “a strong political signal” to Vladimir Putin, because, once in place, this mechanism can be tightened.


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