March changes
Elizabeth Rosenberg, Under Secretary of the Treasury for Terrorism Financing and Combating Financial Crime, told RIA Novosti during the CERAWeek international energy conference in Houston that the G7 countries are planning to “reassess the price ceiling” for Russian oil in March.
He declined to elaborate on whether the US expects a change in the marginal cost of oil to affect Russia’s stance on Ukraine. Rosenberg also said he “has nothing to say” about whether he saw an imbalance in supply and demand in the oil market following the US price cap.
The previous day, US Energy Representative Amos Hochstein declarationThat price ceilings imposed by the G7 and its allies “work well”.
“I think the beauty of the process is that it works and that Russian oil and Russian products are sold at below marginal prices,” quoted Reuters on the sidelines of the CERAWeek energy conference.
Hochstein noted that Russia has announced that it will reduce production by 500,000 barrels per day, or 5% of production. He believes this decision has “small impact” on the cost of oil from the Russian Federation.
“I don’t know why Russia is reducing their production. I don’t think the prices are that high. “We want to make sure that Russian barrels are on the market and are traded at a discount,” said the U.S. Energy Representative.
Halving the price ceiling
On December 5 last year, the ceiling price for Russian oil came into effect, which was approved by the G7 countries, the European Union and Australia. It was set at $60 a barrel, but Poland insisted on a $30 ceiling. It is assumed that the restrictions will be reviewed every two months.
6 March Estonian Foreign Minister Urmas Reinsalu declaration In an interview with Bloomberg, he said his country has urged the European Union to lower the marginal cost of Russian oil to $30 per barrel.
“The European Union should halve the cap of $60 for Russian oil this month and further limit Moscow’s ability to finance the war in Ukraine,” Reinsalu said, adding that this would be “the right direction.”
He noted that EU countries must also tackle methods of circumventing sanctions that “allow President Vladimir Putin’s government to access technology to fuel the war machine.”
The authors of the publication reminded that EU countries are determined to maintain the marginal price of oil to be 5% below average market prices. However, any changes to the threshold are determined by the G7 countries.
“The United States and other countries are reluctant to lower the price ceiling for the time being for fear that this could lead to a sharp rise in oil prices, so a reduction in the scale suggested by Reinsalu seems unlikely. And the decision to change the price cap requires first the support of the G7, then the consensus of all EU member states,” the Bloomberg article states.
In addition, Reinsalu said in an interview that Russia’s banking and insurance systems can still operate in the international SWIFT transaction network and that the ceiling on crude oil prices should be extended to natural gas as well.
“Of course, this is a matter of agreement, but we will not give up on this call,” said the Estonian Foreign Minister.
Reinsalu is convinced that it is necessary to suppress Russia’s attempts to avoid sanctions. According to him, the Russian Federation buys European-made chips and integrated circuits used in modern missiles and tanks from Turkey, United Arab Emirates and Kazakhstan.
According to Estonia’s foreign minister, his country is also “trying to set a precedent for the EU by confiscating the frozen assets of sanctioned Russians so that they can be transferred to Ukraine for recovery.” He announced that Estonia had frozen about 20 million Euros from private Russian companies.
Skip the sanctions
February 24 Bloomberg reportedThat Russia managed to break the price ceiling and sell oil well above the ceiling price. According to the agency, “prices averaged $74 per barrel in the first weeks after the lockdown.”
The study undermines the notion that price ceilings are reducing Moscow’s revenue to finance the war in Ukraine. In the four weeks following the quarantine, Russian oil averaged around $74 a barrel. <…> Citing data from calculations by the Institute of International Finance, Columbia and Universities of California, this is about a quarter above the threshold.
The authors of the material noted that these data were met with “alarm” in Western governments, “as they claim that measures to block the Kremlin’s access to petrodollars have been crowned with great success.”
The US argues that even if Russian oil trades above marginal prices, this gives buyers a chance to negotiate, while avoiding a massive cut in exports that would boost prices.