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Post: The expert believes that Russia is unlikely to introduce a reduction ceiling in oil


Oil pumps in the Almetyevsk region of the Republic of Tatarstan. archive photo

Expert Mironyuk: Russia unlikely to introduce a discount ceiling for Ural oil in response to sanctions

MOSCOW, December 7 – RIA Novosti. The reduction ceiling for Russian Urals oil to the reference Brent grade is unlikely to be approved in Russia, as a response to the price ceiling imposed by the West, as it would imply non-market pricing, including in friendly importing countries, according to one expert. The exchange “BCS World of Investments” Yevgeny Mironyuk, announced on the exchange to RIA Novosti.

The Vedomosti newspaper on Wednesday wrote that Russian officials have developed three possible responses after the EU and the G7 set a ceiling on oil prices imported from Russia. One of the options is the introduction of the so-called indicative price, that is, the determination of the maximum discount of Russian Ural oil to the Brent reference grade. And if the discount exceeds the “ceiling”, the sale will be prohibited.

“Applied to all buyers of Russian oil, it will probably have to be deleted (this paragraph – ed.). If the “certain” maximum discount for Brent is fixed, this will mean non-market pricing in relation to Brent. Mironyuk, friendly importing countries “Specific” maximum discount If it is determined by a certain formula, disputes may arise and the volume of exported oil may decrease.”

The newspaper’s sources informed the countries that support the restrictions that another option could be to completely ban the sale of oil, even if they buy raw materials from the Russian Federation not directly, but through intermediary states or their chains. If the end customer is a member of the G7, the supply will be blocked. The third approach is the prohibition of export within the scope of contracts that include a ceiling price condition, regardless of which country the buyer is.

According to the expert, these options essentially formalize the refusal of oil supplies to countries that have agreed to price ceilings. These sanctions even reflect the EU’s ban on imports of Russian raw materials, announced in the sixth round of sanctions earlier this summer.

Western oil sanctions came into effect on December 5: The European Union stopped accepting Russian seaborne oil, while the G7 countries, Australia and the EU imposed a price cap on this type of oil at US$60 per barrel.

Russian oil price ceiling
5 December 10:00infographics

Russian oil price ceiling



Source: Ria

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