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Kiev’s Speculation About Russian Oil Price Cap Plays Into US Hands

© Sputnik / Maxim Bogodvid / Go to the mediabankA Russian oil rig. File photo
A  Russian oil rig. File photo - Sputnik International, 1920, 23.03.2023
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Ukrainian authorities do not understand the mechanism of establishing a price ceiling for Russian oil, Maxim Kanishchev, head of the Moscow-based non-profit think tank Unselm, told Sputnik.
A US media outlet cited Oleg Ustenko, an economic adviser to Ukrainian President Volodymyr Zelensky, as proposing slashing the Russian oil price cap by up to $20 per barrel from the current $60.
Ustenko reportedly said that while Kiev wanted to cut the price cap in half to about $30 per barrel, he personally saw the $10-20 price cap as possible, the US weekly reported. The adviser claimed that Russia was receiving "much less revenue" compared to the situation before the imposition of the oil price cap.

"The desire of representatives of the countries that are G7 and G20 non-members to speculate on this topic indicates their inability to read documents in English, in particular, those parts that contain description of the mechanism for calculating the oil price cap," Kanishchev said, in an apparent nod to Ukraine.

According to him, such actions "play into the hands of the US, which, in principle, looks to get rid of the price review mechanism so as not to engage in reconciliation and the search for consensus between European countries, which can agree on nothing."
The expert recalled that the average price of Russian Urals oil stood at $50.8 per barrel between February 15 and March 14. He explained that according to the mechanism established by the G7, the oil price сeiling should each time be set at a level that is 5% lower than the market price, calculated on the basis of data from the International Energy Agency (IEA).
That’s why the oil price cap’s reduction to $10-30 dollars per barrel is even formally impossible, Kanishchev added.
An oil pumpjack is seen in Almetyevsk District, Tatarstan, Russia. - Sputnik International, 1920, 13.02.2023
Russia
Russia's Oil Production Cut in Line With Pledge to Retaliate for West's Price Cap, Expert Says
Shortly after Russia launched its special military operation in Ukraine, Kiev's Western allies actively started searching for ways to limit Moscow’s energy-related income, notably from oil and gas. The effort culminated in a $60 price cap on Russian oil imposed by G7 members and Australia on December 5, 2022.
Moscow responded by banning the supply of Russian oil and petroleum products if contracts directly or indirectly provide for a price cap, in a decree signed by President Vladimir Putin late last year.
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