Biden Says Negotiations on Russian Oil Price Cap are ‘in Play’

52 thoughts on “Biden Says Negotiations on Russian Oil Price Cap are ‘in Play’”

1. But the plan is almost certainly doomed to fail as it requires Russia’s cooperation, and Moscow is warning that it will cut off any countries that participate in the price cap. And if Russia retaliates by cutting oil production, it could send global prices skyrocketing.

   It only requires Russia’s cooperation if Russia can transport/insure all its own oil or afford to close its oil wells (the problem being that they clog up and are difficult to restart).

   Industry experts also say enforcing the plan will be difficult as it will be hard for insurance companies to know what price the oil is really being sold at.

   This is a better point, but so far the Chinese companies, the Indian banks (and many CSTO countries banks too) have all erred to the side of caution to avoid the risk of secondary sanctions so perhaps the oil importers will do the same too!

   Claiming that they buy the oil at what effectively is a rebate yet paying full price is perhaps also problematic if the cargo is damaged/impounded and only the listed value payed out as compensation.

   Treasury Secretary Janet Yellen, who has led the push to implement the price cap, said recently that India could continue to purchase oil from Russia at any price, signaling that it may not be enforced on Moscow’s Asian buyers.

   As I understand the price cap idea any nation capable of transporting the oil can buy at the price they like, however the Indians and the Chinese have been buying at an effective rebate corresponding to the level of the price cap – while we could imagine that they would be willing to pay more than other customers for Russian oil to support Putin, it would not make a lot of economic sense.

   1. And finally, if the dog hadn’t stopped to poop, it would have caught the rabbit.

      1. When you find the questions too hard to answer is this then the best you can do?

         1. Your questions strike me as unanswerable, so the only thing left is snark.

            1. You could look it up – the Russian tanker shortage is according to my sources at about 105 tankers:

               Braemar calculates that Russia currently faces a shortfall of nearly 70 aframaxes and 35 suezmaxes to move the trade in its entirety. Braemar believes the dedicated Russian controlled fleet is 50 aframax/LR2s and 10 suezmaxes. This includes the shuttle tanker fleet, not all of which be available for international voyages.

               https://splash247.com/russia-rushes-to-fix-tanker-fleet-with-six-weeks-to-go-until-eu-crude-ban-starts/
               But why do any work when snark is so much easier?

         2. Sometimes I find questions difficult too, I know it comes with age but let me ask you, since you are such a knowitall….How much wood could a woodchuck chuck if a woodchuck could chuck wood?….

            1. 😂

      2. And the bear wouldn’t have caught and ate the dog.

   2. “while we could imagine that they would be willing to pay more than other customers for Russian oil to support Putin, it would not make a lot of economic sense”

      There are circumstances under which it COULD make economic sense.

      Reliability is an economic factor.

      The US has a huge reliability problem insofar as it squats and starts sh*tting economic sanctions at the drop of a hat. Buying from, or selling to, the US has become a sort of perpetual hostage situation. And there’s the transport problem.

      The Middle East is always threatening to explode into various permutations of war or near-war that could result in shipping interruptions.

      If Russia can RELIABLY fulfill Chinese and Indian demand via pipeline, etc., that might be worth paying a premium for.

      1. There are circumstances under which it COULD make economic sense.

         Quite right.

         Reliability is an economic factor.

         The US has a huge reliability problem insofar as it squats and starts sh*tting economic sanctions at the drop of a hat. Buying from, or selling to, the US has become a sort of perpetual hostage situation. And there’s the transport problem.

         Very true – I did not imagine that India or China would be importing from the US – what we see however is that the group others (as customers of Russian oil) has dropped off completely so there is not much evidence that others are willing to rely upon Russian oil – while India is still buying more than before the war they are now buying less than some months back.

         The Middle East is always threatening to explode into various permutations of war or near-war that could result in shipping interruptions.

         With Iran and Saudi Arabia in near conflict this could hardly be more relevant than now – again this has however not yet led to more orders for Russian oil – it will if the war gets hot in the gulf, but otherwise I kind of doubt it.

         If Russia can RELIABLY fulfill Chinese and Indian demand via pipeline, etc., that might be worth paying a premium for.

         Very true – building the pipelines first will take time though – as the current pipeline infrastructure is already maxed out.

         1. “Very true – building the pipelines first will take time though – as the current pipeline infrastructure is already maxed out.”

            Absolutely.

            If the Russian invasion of Ukraine had gone the way the Georgia war went — go in, get it done, get out — the sanctions would likely have not been as large-scale, or as damaging to either side, or as difficult to undo.

            But since things went the way they went, there are (likely long-term) realignments taking place, and those realignments are going to entail costs on all sides. They may also entail some benefits for some players, but war is almost always a negative-sum game for most participants (the US got lucky with World War Two insofar as its industrial plant wasn’t wrecked like that of most participants).

            1. If the Russian invasion of Ukraine had gone the way the Georgia war went — go in, get it done, get out — the sanctions would likely have not been as large-scale, or as damaging to either side, or as difficult to undo.

               I absolutely agree with you that this has to have been the Russian calculation.

               But while I do not doubt that there would be far fewer sanctions in numbers and less backing, but I think that the US at the very least would have gone very far to hurt the Russian economy – for the simple reason that it is far easier and much less costly to take down the Russians than it is to have an economic conflict with the Chinese.

               I believe that the US is fairly convinced that if they do not show the resolve to resist the Russian aggression in Ukraine they will have to cope with a Chinese SMO in/on Taiwan in the very near future (2-5 years?). Not to mention the likely substantial number of other nations ‘settling scores’ in the shade of such larger conflicts (e.g. Armenia/Azerbaijan).

               But since things went the way they went, there are (likely long-term) realignments taking place, and those realignments are going to entail costs on all sides.

               Yes to the degree that things are under central control. To the extend they are market controlled the realignment is mostly going in the direction of away from Russia – if you are in doubt I can provide copious links to CSTO countries ending or limiting their Russian engagements – but I do acknowledge that as you pointed out earlier that Russia/China/India are likely to build pipelines to export Russian energy in a more reliable and cheaper way to these trade partners who are likely to put a higher value on the independence of action this additional source grants them.

               They may also entail some benefits for some players, but war is almost always a negative-sum game for most participants (the US got lucky with World War Two insofar as its industrial plant wasn’t wrecked like that of most participants).

               There may be benefits for some players, but more likely it will only be relative (if we are talking about nations that is) in the sense that everyone could have been richer had the war not happened – this I believe also holds true for WWII (though I’m not happy to engage in too much alt history speculation).

2. If investing I am betting on the price of oil to skyrocket after December 5th.

3. “According to a report from The New York Times, the US has allowed the EU to take the lead in determining what the price cap will be set at.”

   The hubris is just comical. Not only do our Top Men actually think this is something plausible to just do, they have the grace to delegate it to Brussels.

   1. The NYT can be a source of cheap amusement. Their impotent propaganda doesn’t work outside the Anglo-American empire. In fact, I’d argue influence of such rags is below levels of conventional propaganda since they are only capable of brainwashing very limited (low intelligence) audience.

4. A price cap sending oil prices skyrocketing, combined with an Israeli attack on Iranian nuclear sites, could be the configuration that plunges the world into nuclear war.
   https://patternofhistory.wordpress.com/

5. “Biden Says Negotiations on Russian Oil Price Cap are ‘in Play’ –Russia says it won’t provide oil to countries participating in the price cap.” What’s “in play?” The chess game is over before it starts. You don’t need a business degree.
   Anyone with half a brain would immediately realize that Russia has the checkmate move on this “play.” Even a street vendor knows when to pack his bags in such a situation. The MSM seems to go along with this stupidity. The US population as well.

   1. His choice of words to make this announcement suggests that Biden probably already knows Yellen’s plan is shaky.

   2. Russia is a Gas Station with Nukes {John McCain). It needs to selll Gas to stay alive and the asian market will not suffice.
      They may pretend they wont bend, but they will or be prepared to send members of DUMA and its oligarchs to the frontlines. No matter what, Russia wont be able to financially sustain this war for much longer.
      Historically, Russia invades countries when economically strong and pulls out troops when broke.

6. LOL without India / China / Russia on board the cap is DEAD .

   1. It certainly would be if they could transport and insure all the oil themselves – but do you know that they can?

      1. All such questions are nothing but filling time.

         1. Is it though the information is available if you are prepared to do a bit of googling.

            1. Old bear has all the genuine answers.

            2. He does DJ, how perceptive of you!!!

            3. Oh , of course Michael, your intellect and knowledge are so exceedingly superior to that of the REST of us that we are unable to comprehend your assertions.
               Better dial that thermostat down to 50. Myself, I’ve been out splitting firewood all day. I’LL be nice and warm this winter! 😁

            4. That is how it works in our house too. 🙂

            5. And it’s ecologically responsible too Donna!
               Burning deadwood emits far less carbon into the atmosphere than allowing it to decompose naturally 🙂

            6. The point being that these are not ‘my assertions’ but views backed up by the sources available with a short google search:
               https://splash247.com/russia-rushes-to-fix-tanker-fleet-with-six-weeks-to-go-until-eu-crude-ban-starts/

               It does not require a huge intellect to follow up on a story – but I guess it does involve a bit of intellect to avoid denying the arguments you’ll find.

               In short for there already to be the tanker capacity to ship Russian oil much, much further afield post December 5 2022 – you would have to believe that there was a very substantial excess capacity before that date – and that this capacity was/is owned/controlled by Russian/Indian/Chinese companies.

               The impending world wide recession may free up capacity so that this problem may be smaller than what the source indicates, but that would mean that there will be much lower demand in the world market and that would mean that the price for oil would be much lower so the price cap would be met in this scenario anyway.

               That is unless you are supposing that China/India would be willing to buy Ural oil even at a significant premium – not currently an assumption supported by current Indian behavior.

      2. We shall see. It may come as a rude surpprise to many that countries other than West have fleets of ships, can actually build them, have technology to explire, extract, process . refine, store or transport energy. It it is Greek and Malta shippers that will suffer. And Midfle East finananciers and insurance corporations are competing fof getting a share if this business.
         I honestly do not understand the whole purpise behind the price cap — unmess it is to establish buyers’ cartel to negotiate prices with producers
         , that is, break up OPEC. Hundreds of years of colonialism has conditioned US, Europe or Australia to control raw materials, and control everything from extraction to transport and sale. Producers of non-western provenance having leverage is a no-no.
         This us why sanctions are flying about — all forms of trade embargoes, and neans of forcing control over global production, development and scientific know how. And the control of global trade routes.

         1. We shall see. It may come as a rude surpprise to many that countries other than West have fleets of ships(1), can actually build them (2), have technology to explire, extract, process(3). refine, store or transport energy(4). It it is Greek and Malta shippers that will suffer(5). And Midfle East finananciers and insurance corporations are competing fof getting a share if this business(6).

            Indeed we will very soon see – as to your points:
            1) yes there is shipping capacity in other nations, they have a choice between servicing the needs they did before the war or switch to servicing the Russians (this has to be the case unless you claim that there is considerable excess capacity in the tanker capacity).
            2) there is this ability in other countries but building new tankers take time and is a huge investment the ones buying this – as it represents excess capacity when/if the Russians stop the flow or sanctions were to be lifted, probably only states will be willing to take this risk.
            3) There are AFAIK very few people with the expertise to open and maintain wells in Siberian artic conditions from what I hear stopping the flow from a well require it to be re-drilled as it clogs up – but I’m no expert and I fully accept that even if halted it would be possible if not easy to reopen a well given time and expertise which as you point out probably can be sourced given money enough.
            5) Yes – but remember that also the Dutch and several other western companies will shoulder this cost.
            6) Well yes – the question here is the cost and to what extend the potential threat of secondary sanctions will make some very cautious to compete, but certainly some like perhaps Saudi Arabian companies will have little fear.

            I honestly do not understand the whole purpise behind the price cap — unmess it is to establish buyers’ cartel to negotiate prices with producers, that is, break up OPEC. Hundreds of years of colonialism has conditioned US, Europe or Australia to control raw materials, and control everything from extraction to transport and sale. Producers of non-western provenance having leverage is a no-no.

            While it could be a device used in a future buyers cartel vs OPEC, I’m fairly sure that this would not work – at present it is to exploit the lack of capacity in Russian or Russian ‘friendly’ nations excess tanker capacity and insurance. As you point out (with the caveat: over time) this is a problem that can be solved – presently I think we will see that the Russians will face an unpleasant choice – but as you say we will see (very soon).

            This us why sanctions are flying about — all forms of trade embargoes, and neans of forcing control over global production, development and scientific know how. And the control of global trade routes.

            I believe that this is not the case if this war had not happened there is no way that the US or any of the rest of the west had embarked on this sanctions path – it is as you point out very damaging to our economies as-well and if not for the war with nothing tangible as a benefit for most of the nations now participating.

7. Yesterday Alex Christophorou of The Duran had quite a bit to say about this.

8. I’m sure India is most grateful that Yellen is going to “allow” them to decide their own trade policies.

   1. Chutzpah right there.

   2. Yellen is a race to the bottom.

      1. Boy, does she have a bottom. Hence the shots of her from the waist up.

   3. The price cap is the dumbest idea throughout this whole thing. Like Alexis Mercouris (the Duran) says on YouTube, it will have more exceptions than a Swiss cheese has holes,. Several former officials in Europe and the U.S. have said it doesn’t work. When Angela Merkel was interviewed just now she thought it was really stupid. Lots of countries will simply ignore it, and you’ll have news every week of how they learn to work around it, rebrand ships, etc.

      Now you have Balts and Poles demanding a price cap at $30, so low that it’s a ban on oil. That will never be accepted. Others want a higher price cap. Others want exceptions. Saudi Arabia and other oil producers are very angry at Washington for trying to decide the price on oil, and it’s no wonder the Saudis have drawn even closer to Russia as a result. Just like India and China have kept buying Russian oil – they know that if Washington can destroy Russia they’ll come for other large powers next.

      1. Yep.
         I don’t know if it will have an impact on resold or relabeled oil. What if Hungary or India buy Russian oil, then “export” it with a new label? I’m pretty sure that’s happening now. But I assume it’s being done with a considerable price markeup.

9. Fartacus expects Europe to grind to a halt and freeze for him. Russia will be very happy to sell to oil less India and China for gold,and US oil will shoot up in price. The despised US big oil will pay some hefty dividends.Get those sweaters ready,boys and girls. a lump of coal as a holiday gift will really be worth something then.

10. Global prices paid by the West will skyrocket. Not so the countries to the East.

    1. They may initially but in the long run will stable and Russia will struggle finding an EU like market.

11. Memo to self: Fill tank before Dec. 5th.

    1. Biden’s comments indicate that he really doesn’t think Yellen’s plan will work. It’s a lot like King Canute trying to stop the tides. She has no control over the politics of oil and gas, and also the inexorable push to war with the Russians.

12. “”Russia says it won’t provide oil to countries participating in the price cap””

    wow has the uncle samuel put a price cap on oil exported from the US?
    never.

13. Bunch of nitwits. Playing with the lives of 8 billion people as if all this was just a board game. Good lord, these people belong in a funny farm, not the White House, …., Oh wait ….

14. isn’t the the phrase, “in play the same one Piatt said not Nulled over the (tapped) phone when he described the 2014 coup. (I think we are in play) Its a Must Hear recording of the Nulled Piatt conspiratoes, even talking about bringing Ban Ki Moon in board their coup!!! ‘

15. Hey, how about price caps on products from Lohid Martin, Northdrip and General Disamics? You think that will work?

    In fact, how about setting $1 price cap for gas in US?

16. They don’t even understand Economics 101. That’s how dumb they are.

17. It is all a play, or how can one senile man end up ruining our peace and open doors of war hell upon our heads.

    And with those same advisors who screwed up before over and over. Just a coincidence?

    1. I do not think Putin is senile and I think he has gotten rid of most of the advisors who got him into this pickle 🙂

18. It might work at a floating cap $1 over market. And even if Maduro caves it’s going to take time to bring sufficient Venezuelan to market.

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