Julia Shvytkina
01 September 2022 18: 30
Headings: World News Policy

And eat a fish, and not choke on a bone: the United States and allies want Russia to sell oil, but not expensive

The G-7 is going to agree on a plan to limit the price of Russian oil, in Russia they called this idea "complete absurdity."

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And eat a fish, and not choke on a bone: the United States and allies want Russia to sell oil, but not expensive

GXNUMX finance ministers plan to hold an online meeting on Friday, during which they are expected to agree on a plan to cap Russian oil prices, пишет The Wall Street Journal.

It is noted that Western officials have been working for several months to find a way to reduce financial flows for "black gold" in the Russian Federation, but at the same time, so that world markets do not suffer from the lack of Russian oil products.

"Our goal here is to create a permitting structure that will allow Russian oil to be supplied, but will reduce their income," US Deputy Secretary of the Treasury said Wally Adeyemo.

Citing sources familiar with the matter, the WSJ writes that the expected statement "opens a new front in the West's hitherto largely unsuccessful efforts to cut Russia's energy revenues", since the war in Ukraine did not give the expected results in weakening the Russian Federation. However, officials will try to resolve some difficult questions about exactly how the price cap will work.

“Oil and gas remain a huge source of revenue for Russia’s war machine, accounting for about half of the country’s budget revenues. Western officials have been working for months to find a way to reduce these financial flows while keeping enough Russian oil on world markets to prevent a new jump in the already high energy prices"- the newspaper writes.

According to the plan that officials discussed this summer, the WSJ journalist writes, G-7 countries will ban financing and insurance of Russian oil supplies, unless oil is sold at a price below the established one. According to the International Monetary Fund, these countries make up just over xnumx%global economy and provide over 90% of global shipping, according to the Brueghel think tank.

Among the key details still being discussed is the price at which an upper limit will be set. Officials are trying to strike a balance between limiting Russian revenues and maintaining incentives for Russia to sell its oil. The price cap will also apply to petroleum products such as fuel oil, another major Russian export, according to sources familiar with the plan.

Treasury Secretary Janet Yellen began pushing for price caps this spring amid fears that a European Union plan approved in June to ban imports and insure much of Russia's oil could drive up prices. She warned that the EU plan could lead to higher inflation. and cause a recession in the global economy, while ensuring that the Kremlin can offset lower oil sales with higher prices." - writes WSJ.

However, according to an American business newspaper, European officials doubtthat the plan will have a major impact on prices. High-ranking officials US Treasury Department believe that markets underestimate the impact of the EU ban on world oil prices, and internal estimates suggest that the price of oil could rise to around 140 per barrel.

“However, important divisions remain within the G-7 over this proposal. Officials have different views on how many non-GXNUMX countries must sign a price cap to make it work,” - the article says.

As the GXNUMX countries themselves gather completely ban the import of Russian oil, the plan depends on the willingness of other global buyers in Africa, Asia and other places to comply with the price limit offer. Countries, or firms in those countries, would have to agree on a price cap in order to accept Russian oil on western insured ships.

However, officials and analysts see little chance of convincing China follow this plan. India, whose purchases of Russian oil jumped from zero before the war to 1 million barrels per day, is also unlikely to sign.

In turn, in Russia, the idea of ​​\uXNUMXb\uXNUMXblimiting oil prices was called "complete absurdity", Deputy Prime Minister of the Russian Federation Alexander Novak saidthat Russia will not supply oil and oil products to those countries that support it.

According to Novak, this is also interference in market mechanisms. "such an important industry as oil", and such attempts will only lead to the destabilization of the oil industry and the oil market.
"For this, first of all, European and American consumers will pay, who are already paying high prices today due to the destabilizing factors that they accept. In particular, sanctions restrictions", - demethylamine.
Recall that 31 May EU countries have agreed to introduce a partial embargo on Russian oil, about which we told in the material at the link, in USA embargo on imports of Russian oil is in effect from 8 March.
Earlier we wrote about how Russian oil gets to Europe, bypassing sanctions, and who makes money on it.

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