The expert told how Russia responded to the price ceiling. The blow will be fatal
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The expert told how Russia responded to the price ceiling. The blow will be fatal
The expert told how Russia responded to the price ceiling. The blow will be fatal
The expert told how Russia responded to the price ceiling. The blow will be fatal
The G7 plan introduces a price ceiling for Russian oil only in theory, writes Forbes. In response, Moscow may use energy resources as a weapon and… | 09/30/2022, InoSMI
2022-09-30T00:10
2022-09-30T00:10
2022-09-30T00:10
Forbes
economy
g7
Russia
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Dan Eberhart There are two possible consequences of the Russian oil export restriction that the G7 leaders agreed upon in early September, both of which do not bode well for the architects of this policy. arrest by connecting third countries to them. In this way, the G7 meeting wants to prevent the Kremlin from making huge profits from oil sales and reduce the impact of prices on those countries that have already imposed restrictions. However, this structure generates significant income. the price cap would trigger significant supply disruptions, which could send world prices skyrocketing. The global economy will be seriously affected. Currently, the cost of crude oil has reached a minimum in recent months due to fears of a global recession, consumers should not relax. that they have managed to develop a clever way to keep Russian oil flowing onshore outside of the annex, where a total ban on this fuel comes into effect on December 5th. Under the chosen plan, if Moscow agrees to sell raw materials at a price set by the G7, which is lower than the market price, it will use the services of insurance, financial, brokerage and maritime companies based in the countries of the groups. For example, London-based International Groupof Protection & Indemnity (P&I) Clubs receive insurance for over 90% of shipping worldwide. dollars, which will comply with the demand and be consistent with the sale of its oil in accordance with the established pass. And, even if consumer countries did not support the choice of measure, this plan, according to Washington, bringing together more participants in the study in order to negotiate with Russia to lower fuel prices, that is, will deal a blow to Moscow’s oil income. a measure of compliance with the standard of regulation of oil flows in Russia in the markets and containment of prices at a lower level than they could be if the embargo was implemented. This is because politics fails to measure the performance of trading markets. In reality, getting around such a price ceiling is quite easy. Ask any oil trader. India and, to a lesser extent, Turkey. These third countries are not subscribed to the price cap. After Russia announced that it would not be its oil states that would join the plan, it would be unwise to decide on their decision. ), or both at once (Turkey). For them, the loss of access to the services of Western insurance, financial, brokerage and transport companies is, of course, a challenge, but not an insurmountable one. to provide insurance services to Russian exports, as a result of which energy trade with Moscow continues to be successful. they are subject to a set price cap and are then secretly paid extra through trading. Moreover, the Biden administration has already stated that the Russian Federation does not involve separate “secondary” detentions – it involved in the case of Iran – to capture the seizure of traffic. Severe secondary restrictions could deprive violators of access to the US financial system. In fact, significant volumes of controlled Iranian and Venezuelan oil continue to find buyers, no matter what. In addition, the imposition of a price ceiling could provoke a retaliatory strike from Moscow. makes decisions based on individual calculations. In reality, Moscow looks increasingly desperate in its conflict with Ukraine. She discovered the accusation of the West in unleashing an economic war. that Moscow does not use its power in the oil markets? The “lower volume-price” strategy is quite capped at the high end while doing more damage to price cap plan architects in the G7 countries. In addition, Russia remains a member of the OPEC+ group. The key members of the cartel are already fed up with oil Riyadh has become closer to Moscow, to Washington. The cartel in Saudi Arabia openly dislikes the Biden administration and apps. The cartel warned that it was prone to restrictive tendencies. The thing is that OPEC+ is also beneficial because of the “less volumes – higher prices” strategy. use that there is no practical sense in it and its use becomes impossible, it notices only a minor risk in conditions where the market cannot afford it – due to the fact that there are very few advanced powerful mining opportunities in the world. Russia’s energy exports and price cap regulation could mean that Moscow is increasing its consumption of barrels from China, India and possibly Turkey, using mainly Chinese and Turkish flagged export vessels. It may even offer them some discounts, which, however, will not fall short of the price limit set by the G7. prices and resources for retrieving them later. The International Energy Agency predicts that once the embargo comes into effect, Russian production will decrease by 1.9 million barrels per day. This is perhaps the most favorable scenario for the G7. The worst-case scenario is a full-scale Russian retaliation that reduces the effectiveness of energy exports as weapons. As a result, crude oil prices on world markets rise to $150 per barrel. that the Biden administration, as well as European and British officials, have demonstrated complete incompetence in the context of broad energy thinking. The introduction of a price cap could well be the final death blow for them.
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forbes, economics, g7, russia, sanctions, oil