EconomyThe EU embargo on Russian oil and the ceiling...

The EU embargo on Russian oil and the ceiling price from the G7 entered into force

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An oil rocker in the Almetyevsk region of the Republic of Tatarstan. archive photo

Sanctions from the G7 on Russian oil and the price ceiling will go into effect on Monday, December 5th.

MOSCOW, December 5 – RIA Novosti. Western oil sanctions go into effect on Monday, December 5th: The European Union stops accepting Russian oil transported by sea, and the G7 countries, Australia and the European Union impose a price cap on shipping at US$60 per barrel.

Traditionally, Russia has been Europe’s main supplier of oil, meeting about 20% of Europe’s raw material needs. But in response to the special operation in Ukraine, Western countries began to develop sanctions measures whose purpose, among other things, was to limit Moscow’s revenue from oil exports.

Embargo

The European Union adopted the sixth package of sanctions in the summer, under which it agreed to impose a gradual embargo on offshore oil supplies from the Russian Federation, with effect from December 5. The transition period for petroleum products will be extended and the ban will come on February 5.

Price restrictions do not apply to oil supply through the Druzhba pipeline.

Ceiling

In addition to the embargo, price restrictions on Russian oil come into effect on December 5. The G7 countries, Australia and the European Union have agreed to limit the cost of oil delivered by sea from Russia to US$60 per barrel.

However, its size will not remain constant and will be reviewed bimonthly, with the first review scheduled for mid-January. The changes will require unanimous approval from all EU members. It is assumed that the marginal price calculated according to the data of the International Energy Agency (IEA) will be determined at a level 5% lower than the market price each time.

How do the parties see the situation?

The OPEC+ Alliance held its meeting on December 4, before the above restrictions took effect. It was decided to maintain the existing oil production quotas. Commenting on the decision and the impending embargo, Russian Deputy Prime Minister Aleksandr Novak said that Russia would not accept a ceiling on oil prices even if it had to cut production. He added that such restrictions are an intervention in market instruments, and that Russia is ready to work only with consumers who will work in market conditions.

No one from the OPEC+ countries has yet commented on these actions of the West linked to the fate of the oil deal. But in early October, Saudi Energy Minister Prince Abdulaziz bin Salman said he did not know what would happen to OPEC+’s European embargo on Russian oil and price ceilings, who would back it, and how the market would react.

On the day of the ceiling price decision for Russian oil, a top European source in Brussels said the introduction of the ceiling would have a positive impact on both world markets and inflation.

It also ensures that the adjustable ceiling relative to the EU will allow continued supply of Russian oil at a below market price.

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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