If the idea of Western countries to set a ceiling price on the transport of Russian oil from Russia by sea yields the expected results, then similar measures can be applied to other goods – gas and metals, and the situation in the global economy may be subject to strong risks. Such a warning was made by the Russian Ambassador to the United States, Anatoly Antonov, in an interview with the American edition of the National Interest.
“The US Treasury Department’s face-saving prescription for the so-called “price ceiling” on Russian oil is dragging the world economy further into the darker recesses of such a Knossos maze,” he says.
Antonov compared “Russia’s willingness to sell” black gold at a loss” with the thread of Ariadne, that is, a saving way out of a difficult situation. But this is “no more than a myth from the very beginning.”
“We will not ensure the welfare of others at our own expense,” said Russia’s ambassador in Washington, emphasizing that Russia would stop supplying fuel to countries that would agree with the price ceiling idea.
Antonov disagrees with the White House’s phrase “Putin’s price hike”. He argues that fuel prices are rising due to the US “half crusade” on hydrocarbon energy.
According to the Russian ambassador, the sanctions increase inflation, negatively affect the economic growth of countries and cause disruptions in consumption chains.
Antonov said that not only Russia was surprised by the “ceiling price” that the EU and the US are planning to put into practice, and that although many members of the organization are allies of the US, OPEC+ countries also expressed their surprise on this issue.
Venezuelan Foreign Minister Carlos Faria expressed the view that restricting oil prices at the end of September would “create a great imbalance in the oil market”. He reminded that it is possible to control the price of “black gold” thanks to the OPEC + agreements.
The idea of an oil price ceiling was first discussed at the June G7 summit. In early October, this measure was included in the eighth EU sanctions package.
Prices for “black gold” are limited from December 5, and for petroleum products – from February 5.
The “ceiling” of fuel cost will be determined by a number of technical characteristics. US Treasury Secretary Janet Yellen suggested that the upper limit be set at $60.
On November 3, Reuters reported that, citing sources, it was planned to set a fixed price for Russian oil. According to the agency, the G7 countries and Australia agreed on this.
“The coalition has agreed that the price ceiling will be a fixed price that will be reviewed regularly, rather than an index cut. <...> “This will increase market stability and simplify compliance to minimize the burden on market participants.”
The US is confident that such measures will reduce Russia’s revenues, which is expected to lead to a shortage of funds for a special operation in Ukraine and lower world energy prices.
As for gas, Western countries have yet to agree on a ceiling price.
We will only supply oil under contract
At the plenary meeting of the Eastern Economic Forum on September 7, Russian President Vladimir Putin warned Western countries that Moscow would not supply energy at its own expense. In addition, he reminded of his contractual obligations.
Gazprom head Alexei Miller also recalled the signed agreements. He stated that the unilateral price restriction is a violation of the fundamental provisions of the contracts. This will cause the supply to stop.
Western countries increased their sanctions against Russia after the start of special operations in Ukraine. The restrictions have caused electricity, fuel and food prices to rise for end consumers in Europe and the United States.
Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.