Oil price ceiling from Russia: Moscow came up with 3 options for EU and G7 response, – rossmedia

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Ceiling oil prices from the Russian Federation: Moscow came up with 3 response options for the EU and G7, – russian media

The Russian authorities have repeatedly announced the suspension of oil supplies to countries that will join the price restrictions. Economists insist on a flexible solution, because large volumes of raw materials are sold through trading operations.

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The Kremlin and the Russian government are discussing 3 options for responding to the price ceiling for Russian oil set by the EU and the G7 (“G7”) ). The Russian newspaper Vedomosti writes about this, citing sources.

The draft decree of Russian President Vladimir Putin is being discussed by his administration with the government, the interlocutors emphasize.

The newspaper describes three scenarios:

  • a complete ban on the sale oil to countries that have supported the price ceiling, including through intermediaries or their chain,
  • supplies of oil products will be blocked if a neutral country buys oil from the Russian Federation, and the G7 member becomes the final recipient,
  • a ban on exports under contracts with the inclusion of a price ceiling condition, regardless of which country will be the recipient of the resource.

Ceiling oil prices from Russia: Moscow came up with 3 options for EU and G7 response, – russian media

Oil Price Ceiling from RF: Moscow came up with 3 options for the answer of the EU and the G7, – Russian media

The third option involves the introduction by Russia of an indicative price – the maximum discount of Russian Urals oil to the reference grade Brent. If this discount is increased, the sale of oil will be banned. Such a development of events is considered the most unlikely by the sources of the newspaper.

The authorities have not yet approved any of these options, perhaps an alternative development of scenarios or a combination of them. This issue was to be discussed on December 6 at a meeting with the president in the presence of representatives of oil companies, the source said.

Russia has previously stated several times that it will not supply oil to those who join the price ceiling. Deputy Prime Minister Alexander Novak believes that the price ceiling for Russian oil will cause an increase in commodity prices.

Bloomberg wrote about Russia's possible setting of a minimum price for international oil sales in response to the restriction of the G-7 countries.

“Russia seeks to offer buyers a transparent pricing mechanism. The Kremlin does not want to oppose neutral states that buy its oil, putting pressure on them with non-market steps,” one of the officials said.

Oil price ceiling: what is Russia's response would be the most likely?

The first and second options for Russia's possible response to the price ceiling for oil are nothing new, said Yevgeny Mironyuk, an expert on the stock market at the BCS World of Investments company. These decisions only formalize earlier statements by the authorities about refusing to supply raw materials to those who agreed to the price cap.

Ceiling oil prices from Russia: Moscow came up with 3 options for the EU and G7 response, – rossmi

Ceiling oil prices from the Russian Federation: Moscow came up with 3 options for the EU and G7 response, – Russian media

The third option is likely to be cancelled. If you fix a discount to Brent oil, then as a result there will be non-market pricing for importing countries “friendly” to the Russian Federation, Mironyuk explained.

Determining the discount using a formula can also cause controversy, which will reduce the volume of oil exported.

Mikhail Vasiliev, an analyst at the Russian Sovcombank, considers the second option most likely, which will ban supplies under contracts with a ceiling condition. This arrangement will become the most flexible, oil from the Russian Federation will be present on the markets and everyone will benefit, he noted.

Alfa-Bank senior analyst Nikita Blokhin also considers the second answer the most likely. According to him, this option was announced by Novak and the press secretary of the President of the Russian Federation Dmitry Peskov.

Russia will not go for a complete ban on supplies to those who have joined the price ceiling, since large volumes of Russian oil are sold through trading operations.

“Novak said that Russia would remain flexible, because editing by third countries through intermediaries would most likely be possible if Russia was satisfied with the price,” Blokhin said.

Ukrainian President Volodymyr Zelensky was unhappy with such a low oil price ceiling. Russia, according to his calculations, will earn about 100 billion dollars in 1 year from the sale of oil.

Poland proposed limiting the price of Russian oil to 30 dollars per barrel. However, the country agreed with the general decision of the EU.