The European Union (EU) was getting closer to setting a $60-per-barrel price cap on Russian oil.
According to one of the EU diplomats, EU nations sought to push the cap across the finish line after Poland held out to get as low a figure as possible.
The latest offer confirmed by three (3) EU diplomats indicated that, there will be a deadline to set the price for discounted oil by Monday, when the European embargo on seaborne Russian crude and a ban on shipping insurance for those supplies take effect.
Not limited to that, the diplomats also spoke on condition of anonymity because the legal process was still not completed.
“The $60 figure would mean a cap near the current price of Russia’s crude, which fell this week below $60 per barrel, and is meant to prevent a sudden loss of Russian oil to the world following the new Western sanctions. It is a big discount to international benchmark Brent, which traded at about $87 per barrel Thursday, but could be high enough for Moscow to keep selling even while rejecting the idea of a cap.”
EU Diplomat
The EU diplomats also expressed that, the risks of the price cap’s failure are immense to the global oil supply. If it fails or Russia retaliates by stopping the export of oil, energy prices worldwide could skyrocket.
His Excellency Vladimir Vladimirovich Putin, the President of Russia has revealed that, he would not sell oil under a price cap and would retaliate against nations that implement the measure.
Individuals Express Their Views On The Oil Price Cap
Robin Brooks, chief economist at the Institute of International Finance in Washington, said the cap should have been implemented earlier this year, when oil was hovering around $120 per barrel.
“Since then, obviously oil prices have fallen and global recession is a real thing. The reality is that it is unlikely to be binding given where oil prices are now.”
Robin Brooks
Steve Mnuchin, former Treasury Secretary disclosed to CNBC during a panel in November at the Milken Institute’s Middle East and Africa Summit that, the price cap was not only not feasible but the most ridiculous idea being implemented.
Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, said that, while a worst-case scenario envisions Russia cutting off the global supply of its oil, the Saudis and Emiratis would boost production.
“Russia has made it clear the countries that abide by the cap won’t receive their oil and that could result in cuts to natural gas exports as well. This will be an interesting few weeks and few months.”
Rachel Ziemba
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