The United States persuaded the allies not yet to tighten oil sanctions against Russia
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The United States, which in December persuaded Europe to soften its oil commitments against Russia just before they came into force, and dissuade the EU from waiting for the expected flow for February, is already approaching, as Washington fears sharp increases in oil and oil products prices in the event of large-scale disruptions in supplies from Russia.
We are talking about the so-called ceiling on Russian oil prices. The G7 countries and the EU introduced it in December at the same time as the European embargo on maritime supplies from Russia. The ceiling was set at $60 per barrel.
The performance of Russian Urals oil has been cheaper since then, the use of the ceiling has not decreased. Some European countries, especially Poland, Lithuania and Estonia, require it to be lowered.
The first chance to do so should have come as early as mid-February, as the G7 and the EU agreed to revise the ceiling in two months and get it at least 5% below observed prices once.
However, the United States persuaded the allies to postpone the review until the proposed March, Reuters and Bloomberg write.
The delay will give time to evaluate another European embargo – on the purchase and transportation of Russian oil products. It goes into effect February 5th. For oil products, as well as for oil, a price ceiling will be introduced. You can start discussing it.
Why do we need “ceilings”
Obama’s ceiling is a US initiative and the actual weakening of the elections against Russia.
The fact is that it is forbidden to import oil and oil products by sea into the EU. A European embargo prohibits a European company. Because of this, Russia has lost access to European tankers, insurance, financing and trading. As an alternative, it is impossible to find quickly, and Russia is facing a sharp export.
The United States of America has decided to limit the scope of the deficit and the jump in prices for oil and oil products in Europe if it is sold below the Western ceiling. True, it was set at a level higher than the current quotes.
Both the EU and the US say the ceiling is working.
Many buyers and insurers in the West have turned their backs on Russian oil, even if it sells for a lower ceiling, as it is a new tool and risk assessment against economic resources is very difficult. As a result, Russia is forced to give a discount to the remaining brave buyers.
How long is the Kremlin expected
This week, the main European indicative sorting of Brent oil was worth about $85 per barrel, while Russian Urals left Primorsk for $45, according to Argus Media quotes.
Therefore, the West says that the goal of reaching the ceiling is that Russian oil continues to flow to the world market, while the Kremlin has less and less money left to finance the invasion of Ukraine.
Deputy Prime Minister Alexander Novak praised President Vladimir Putin for the importance that Russia was faced with the high cost of freighters, and therefore money was needed to sell oil.
The Finnish research center CREA even calculated exactly how much – 160 million euros per day. As a result, after the cases due to the oil embargo, the number of daily losses increased by another 120 million euros, he predicts.
Russia threatens to retaliate, as it did in December. Then Putin approved a decree on protection from the ceiling, but the matter did not come to an oil war with the West.
“So far, no one has come across the ceiling in particular,” Kremlin spokesman Dmitry Peskov said to a significant extent and added: “Any restrictive measures like this taken again, they, of course, will meet opposition.”