EconomyFailed experiment: Russian oil put Europe in deadlock

Failed experiment: Russian oil put Europe in deadlock

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MOSCOW, 30 November — RIA Novosti, Natalia Dembinskaya. Negotiations on the oil price ceiling were inconclusive. The first of the proposed options, as it turned out, will not affect Russia in any way, and no one will fit the second. Western experts seem to have succumbed to the fact that this idea will not materialize.

zero effect

An agreement has been reached on limiting the price of natural gas in the EU. The market was waiting for what would be decided in oil. Actually, this is an American idea. The goal is to retain supplies but deprive Moscow of revenue. As Politico points out, Washington continues to pressure Europeans to do everything quickly.

However, there is still no clarity in the EU.

One option costs $65-70 per barrel. But Russia will not notice this. The Urals are already a little more expensive than 70.

“It wouldn’t make any sense if we set the bar too high. Oil is Russia’s biggest source of revenue, so it’s important to do everything right to really impact Moscow’s ability to finance a military operation.” Valdis Dombrovskis, Vice President of the European Commission.

“Market prices are currently below the suggested ceiling of $65. What is the point of such restrictions?” – Reuters quotes a source in diplomatic circles in Brussels. As the diplomat emphasized, in order to “hit the Russians in the pocket”, it is necessary to “reduce their income and not keep it at the same level”.

thirty dollars

Poland and the Baltic states insisted on 30 dollars. However, this proposal was not supported either.

Cyprus, Greece and Malta, whose tankers carry Russian oil, said that in this case Russia would refuse to export. Accordingly, sea carriers will suffer.

The Financial Times states that it is important to show the unity of the EU and that Poland can intervene in this.

They will not participate in any artificial restrictions in Moscow.

Deputy Prime Minister, “We have a very difficult position here, I have already talked about it more than once. Whatever the ceiling. Even if it is high, it is unacceptable in principle in terms of contracting.” Alexander Novak emphasized.

meaningless idea

As analysts point out, whatever Brussels decides is completely pointless.

“The idea that the $65-$70 limit will affect Putin is ridiculous. While oil production is almost unchanged, the Kremlin is making a lot of money,” Bloomberg stresses.

Indeed, various energy sanctions, including the US ban on imports of Russian fossil fuels, did nothing. Moscow diverted crude oil to China, India and other buyers who wanted to buy oil at a discount. As a result, production in Russia decreased by only two percent.

According to Eurostat, Russia sent around 80 million tons of crude oil and petroleum products to the EU in January-September. For the same period last year – 84 million. But due to the increase in raw material prices, revenues increased: for the whole of 2021, suppliers received 33.5 billion euros from Europe, and for the first nine months of 2022 – 46.75.

search for space

A fixed price cap won’t work either. “It hasn’t helped Iran and Venezuela, and they’re much weaker financially. And even though inflation is already at a 40-year high, prices are at risk of exceeding a hundred dollars. Regardless, major Bloomberg analysts claim the importers are China, India and Turkey. .

Prices are not the only problem. The ceiling will need to be adjusted constantly due to the changing value of the Brent brand. UBS analysts are confident that they are unlikely to observe this for long – they will quickly find gaps.

Such restrictions seem doomed to fail. Also, Russia could drastically reduce production by hitting the world market hard. According to the International Energy Agency, Russia’s exports are currently about 9.7 million barrels per day. If you remove at least some of this supply, offers will skyrocket, fuel prices will rise, and the energy crisis will reach a new level.

Source: Ria

Emma
Emma
I am Emma Sickels, a highly experienced journalist specializing in news and economy. As an author at News Unrolled, I cover the latest trends in the economic sector and provide readers with valuable insights into its complexities. My work has been featured in various media outlets such as The New York Times, USA Today, Bloomberg Businessweek and many more.

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