crude oil price cap

The clock ticks on Russian oil price cap scheme


Russian President Vladimir Putin said on Thursday (Nov. 24) that attempts by the West to introduce a price cap on oil Russia is producing will very likely seriously affect the global energy market.

“Such actions are contrary to the principles of market relations,” he told new Iraqi Prime Minister Mohammed Shia al-Sudani, according to the Kremlin’s press release.

Earlier, Russian Foreign Ministry spokeswoman Maria Zakharova reaffirmed that Moscow wouldn’t supply crude oil to countries that support the price cap proposed by the European Union. The Kremlin also said it will make a final decision once it analyses the figures.

European Union governments remained split over what level to cap Russian oil prices without causing a global oil supply shock, with more talks possible on Friday (Nov. 25). Poland reportedly wanted to set the ceiling at $20 per barrel but asked for $30 per barrel by the end of negotiating round. On the other hand, the European Commission and the Group of Seven are proposing $65 to $70 per barrel (which is around the level Russian crude currently trades at) as the maximum price.

U.S. Secretary of the Treasury Janet Yellen proposed the $60 cap, according to Politico. The publication said that most EU Member States agree to the price ceiling proposed by the G7. The G7 believes the price cap should enter into force on December 5.

Reuters reported that Greece, Cyprus and Malta, countries that stand to lose the most from falling Russian oil exports, are demanding compensation or a longer transition period.

“And I’m confident that we will very soon approve a global price cap on Russian oil with the G7 and other major partners” European Commission chief Ursula von der Leyen  told a news conference during a visit to Finland on Thursday.

“If the EU agree to an oil price cap of $65‑70/bbl this week, we see downside risks to our oil price forecast of $95/bbl this quarter,” Commonwealth Bank commodities analyst Vivek Dhar said in a report.

Oil prices fell on Thursday.

With reporting by Reuters, Politico, TASS