WASHINGTON (AP) — G7 countries and Australia joined the European Union on Friday, adopting a $60 per barrel price cap for Russian oil.This is an important step as Western sanctions aim to reshape global oil markets. To prevent price spikes and deplete President Vladimir Putin’s war funds in Ukraine.
Europe had to set discounted prices paid by other countries by Monday And the ban on insurance against those goods comes into effect. Price Cap Led by G-7 Wealthy Democratsaimed at preventing a sudden loss of Russian oil to the world that could lead to new high energy prices And more fuel inflation.
US Treasury Secretary Janet Yellen said in a statement that the deal would help limit Putin’s “primary source of revenue for his illegal war in Ukraine” while also helping to maintain the stability of global energy supplies. Stated.
The agreement came after last minute negotiations. Poland postponed the EU deal for a long time, trying to set the ceiling as low as possible. After more than 24 hours of deliberations, Warsaw finally relented late Friday when other her EU countries signaled their support for the deal.
A G-7 coalition joint statement released on Friday said the group “stands ready to review and adjust the maximum price if necessary,” citing market developments and commitments to coalition members and low- and middle-income countries. Considering the potential impact of
Estonian Prime Minister Kaja Karas said, “Destroying Russia’s energy revenues is central to deterring Russia’s war machine,” and was pleased that the cap had been cut a few dollars from previous proposals. She said that each time the cap is lowered, Russia’s military budget will be reduced by $2 billion.
“It’s no secret that we wanted to bring the price down,” Karas added, highlighting differences within the EU. “Prices between $30 and $40 would hit Russia hard. But This is the best compromise we can get.”
The $60 figure sets an upper limit close to current Russian oil prices, which recently fell below $60 a barrel. Some critics say it’s not low enough to undermine one of Russia’s main sources of income.It’s still a big discount to international benchmark Brent, which fell to $85.48 a barrel on Friday, but it rejects the cap idea. However, it could be high enough for Moscow to continue selling.
There is a significant risk to the global oil market of losing large amounts of crude oil from the world’s second largest oil producer.Could push up petrol prices for drivers Caused political turmoil for US President Joe Biden and leaders of other countries.Europe is already in an energy crisisgovernment faces protests over rising cost of livingdeveloping countries are more vulnerable to changes in energy costs.
But the West faces increasing pressure to target one of Russia’s main moneymakers — Oil — cut money flowing into Putin’s military coffers, hurting Russian economy As the war in Ukraine enters its ninth month.Oil and gas prices soar After demand recovered from the pandemic, the invasion of Ukraine destabilized energy markets and drained Russia’s coffers.
John Kirby, a spokesman for the U.S. National Security Council, told reporters on Friday, “The cap itself would limit Putin’s ability to profit from oil sales and fund his war machine.” It would have the desired effect of limiting the ability to continue to provide
But more uncertainties lie ahead.COVID-19 restrictions in China A slowing global economy could also mean less craving for oil. That’s what OPEC and allied oil producers, including Russia, pointed out in his October cuts to world supplies.The OPEC+ alliance is scheduled to meet again on Sunday.
This competes with EU embargoes that could deprive the market of more oil supplies, raising concerns about tight supplies and rising prices. Russia exports about 5 million barrels of oil per day.
Putin has said he has no intention of selling oil under the cap and will retaliate against countries that implement the measures.But Russia has already rerouted much of its supply to India and China. Other Asian countries are being sold at discounted prices because Western customers avoided it even before the EU embargo.
Most insurers are located in the EU or UK and may be required to participate in price caps.
Russia could also use its ‘Dark Fleet’ tankers with unknown owners to sell oil off the books. The oil could be transferred from one ship to another and mixed with oil of the same quality to disguise its origin.
Even under such circumstances, the cap would make it “more costly, time-consuming and unwieldy” for Russia to circumvent the restrictions and sell oil, said a sanctions expert at the International Institute for Strategic Studies in Berlin. said Maria Shagina, who is home.
Robin Brooks, chief economist at the Institute for International Finance in Washington, said the ceiling should have been set when oil prices hovered around $120 a barrel this summer..
“Oil prices have clearly fallen since then, and a global recession has become a reality.” is low.”
European leaders touted their commitment to price caps brainchild of Yellen.
“An EU oil price cap agreement, coordinated with the G7 and others, would significantly reduce Russia’s revenues,” said Ursula von der Leyen, president of the European Commission, the EU’s executive body. rice field. “This will help stabilize global energy prices and benefit emerging economies around the world.”
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Casert reported from Brussels and McHugh from Frankfurt, Germany. AP reporter Aamer Madhani contributed from Washington.
