The Russian oil price cap came into effect on Monday. The EU, the G7 countries and Australia want to exert financial pressure on Russia in the war against Ukraine. According to the EU Commission, all 27 EU member states approved a price cap of $60 per barrel for Russian oil transported by sea over the weekend. That would be a good ten percent less than the $67 market price for Russian Urals oil on Friday.
According to one source, the Russian government is preparing a decree in response. It is intended to prohibit domestic companies and dealers from business contacts with countries and companies that are based on the upper limit. This will ban the export of oil and oil products from such countries, the source told Portal.
no china
EU countries and the major industrialized countries allied with them will likely have to do without Chinese help with their oil price cap against Russia. Beijing wants to continue its energy cooperation with Russia on the basis of respect and mutual benefit, Russian news agency RIA reported on Monday, citing China’s Ministry of Foreign Affairs. The People’s Republic has increased its imports of Russian oil this year, which is significantly cheaper than other types of oil.
Austrian energy expert Walter Boltz expects the oil embargo against Russia could raise prices by up to 20% for a few weeks. Overall, however, he doesn’t expect any massive effect on European end-customer markets, said the former head of energy regulator E-Control and current adviser to the federal government on ORF radio. “It cannot be ruled out that we will have higher prices for some products like diesel, gasoline and heating oil for one to two months,” said Boltz. “It could be ten, 15 or 20 percent,” he added.
Exception: pipeline oil
Pipeline oil flowing to Europe is exempt from the limit. Hungary, among others, pushed for it. As of 2023, however, the German federal government no longer wants to buy Russian oil in this way. It is looking at other ways to secure supplies to the refinery in Schwedt, which is important for fuel supplies in eastern Germany.
Since Monday, EU shipping lines can only transport Russian crude oil if it is sold below or at the G7 price ceiling. This also applies to insurance, reinsurance or other financing of the oil business. With the world’s leading shipping and insurance companies based in the G7 countries, the price cap could actually make it harder for Russia to sell its oil at a higher price. (Portal)