A coalition of nations seeking to cap Russian oil prices, which includes the G7, the European Union and Australia, is expected to announce the proposed cap. “In the next few days”according to a Treasury Department official, the US Treasury Department. “In the next few days, our coalition will announce the level of oil and gas prices.” made by Russia “We are working with our partners to finalize this.”this manager clarified during a telephonic press briefing.
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The goal is to reach the maximum price for Russian hydrocarbons that can be applied before the entry into force of new European sanctions scheduled for December 5. This new set of sanctions, in particular, envisages banning insurers and reinsurers from covering the maritime transport of Russian oil, and exempting European operators in the case of an agreement if the oil is sold at or below the predetermined price. ceiling
“We are taking a step-by-step approach so that the market integrates the introduction of the cap as simply as possible.”, said the same source. However, questions remain unanswered about the mechanism that allows for setting the maximum selling price for Russian oil, as well as how that ceiling will be updated according to market price fluctuations.
“Our goal is to update it regularly, which will hopefully be quarterly or semi-annually, because we want to bring visibility to the market.”, added this official. Limiting the price of oil sold by Russia should allow to reduce its financial resources and, therefore, to continue the war in Ukraine, but also to restrain the increase in the prices of energy carriers. That price, however, must remain higher than the production price to encourage Russia to continue selling it rather than cutting the floodgates.
The Kremlin has warned that Russia will no longer supply oil to countries that accept this threshold. Decision which “It wouldn’t be to their advantage” however, we judge by the Treasury because “Any action they take will affect customers like India and China that they want to retain. So we believe they will continue to supply oil to themselves and their other customers.”.
Source: Le Figaro
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