Russia on Saturday rejected the EU’s decision to impose a price cap on Russian oil for $60 per barrel and warned it will cut off any country that endorses the cap.
The EU’s ban on Russian oil will take effect on Monday, and the idea of the cap is so European insurance and other services can continue for Russian oil shipments if the crude is sold at the $60 limit. But Russia has warned since the plan was first discussed by the US and G7 that it wouldn’t comply.
“From this year, Europe will live without Russian oil,” Mikhail Ulyanov, Russia’s envoy in Vienna, wrote on Twitter. “Moscow has already made it clear that it will not supply oil to those countries that support anti-market price caps. Wait, very soon the EU will accuse Russia of using oil as a weapon.”
Kremlin spokesman Dmitry Peskov said Russia would not accept the cap and was assessing how exactly to respond. “We are assessing the situation. Certain preparations for such a cap were made. We won’t accept the price cap and we will inform you how the work will be organized once the assessment is over,” he said.
If Russia decides to retaliate by slashing oil production, it will send global prices skyrocketing. Russia on Sunday attended a meeting of OPEC+, where the oil-producing nations agreed to maintain current production levels, which they reduced by 2 million barrels per day in October.
Ukrainian President Volodymyr Zelensky doesn’t think the EU’s $60 price cap is low enough and slammed the move as “weak.” He said the EU’s determination was not “a serious decision” and that Russia would be “quite comfortable” at that level.
If the price cap plan backfires and leads to a major increase in global oil prices, it will also raise gas prices in the US, which have just returned to levels seen before Russia invaded Ukraine and the West began targeting Mosco with energy sanctions.
Nowhere can be free as long as the US rules the world. Now we even reject free markets, while Russia of all places champions them.
Now Yellen will propose a plan to cap the price in the US, … high enough (silently) for a nice profit, … the Republicans will block it ‘on principle’ … and Biden will get to shift the blame to the Republicans & Putin.
Al part of the Americans plan to have Europe at it`s mercy concerning Energy supplies .
Start your inflation engines! No Russian oil, OPEC and Saudis cutting production (in yet another embarrassment to Biden). Can’t wait to get back to $6 a gallon soon, or as Friedman predicted in his NYT op-ed (https://www.nytimes.com/2022/10/25/opinion/putin-energy-gas-prices.html) , $12 a gallon by Christmas! Thank you, neocons for your present to Americans this holiday season. (My local Costco sold out of eggs again this weekend…this is the world Biden brought us…)
We get our eggs from a local farm. Fresh. Same with vegetables. The price of regular gas in our area settled in the low 5’s. Joe cannot completely tap the reserve to make up the difference. The West (NATO) is using up its weapons inventory. Gas is about to go back up. Anything related to fossil fuel (plastics, etc) will go back up. Perfect, huh?
Not overly optimistic… “Oil as a weapon?”
“Merry Christmas!” I’m going to be curious to see how all of this impresses (or not) Russia?…
Yes please cut oil from Europe so that it can soars to $120 a barrel. U.S. is counting on that move. Save the Petrodollar!
A few points:
1) EU is supposed to end buying oil (I believe Hungary and Czechia excepted) thus Russia can’t cut EU from oil.
2) If Russia no longer supplies oil to EU but does sell to others who do not adhere to the price cap, then oil prices would not soar for any long while as the amount of oil on the market would not go down.
Thus for your price to come true beyond the initial period of uncertainty what you are suggesting is that the Russians have to be able to export far less oil and thus earn much less – a possible scenario – but is that what you are suggesting?
That’s what Putin has been saying.
What is? That Russia will export substantially less and thus earn less or they they will not be hurt at all by the sanctions and thus export as much oil by value?
“Cut oil to anyone imposing the price cap.”
That still does not say whether he or you expect the prices to go up i.e. if the refusal to deliver to nations following the price cap will result in lower Russian oil sales.
The only question is how much it will go up.
OK so you believe that the Russians won’t be able to export as much oil as they used to – I agree this is the most likely result.
They don’t need to. The price is adequate for their needs. They could even cut production and still make profits, but the EU would pay more.
EU is not going to buy oil from the Russians at all any more – so Brent only – the price cap applies to oil transported by western shipping or insured by western companies.
Perhaps they will export substantially less and earn about the same.
That would require dramatic price rises – which is possible – it will be interesting to see – so far there has not been any dramatic move in the prices. Brent is roughly the price the Eu pays, while Ural is the price Russia is payed:
https://www.investing.com/commodities/crude-oil-urals-spot-futures-historical-data
https://www.dailyfx.com/crude-oil
YES. They sell to their customers (the good guys!) and those guys eg China, raise the price and sell to the EU!!
It is worth watching Alexander Mercouris’s explantion of the winners in today’s video!!