…Ukraine calls for review
The G7 and the EU coalition is set to soon implement another price cap on Russia oil, this time, on the country’s other petroleum products.
According to the plan, although criticized for its complex nature, and dual cap, the new cap will go into effect on February 5. In the dual cap, one would be for crude products that trade at a premium to crude oil, while the other will trade at a discount.
Ahead of the next phase of the sanctions, Ukraine’s foreign minister has suggested that time is ripe for a review of the price cap on Russian crude oil, because the current market price of Urals is below the cap.
Last year, a coalition made up of the G7 countries as well as Australia and the EU set a price cap on all seaborne Russian crude oil. The goal is to reduce Russia’s oil revenue that it could use in marshalling the war in Ukraine.
Also Read: US Not Likely To Support Lowering Russian Oil Price Cap Now
Russia, however, said while the policy is unacceptable to it, it would not sell oil to anyone attempting to enforce or support the price cap.
Surprisingly, Putin and his men have said it had yet to see any cases of price caps on its oil. And therein lies Ukraine’s problem with the price cap, if that is indeed true.
Russia’s Urals crude oil grade for delivery to Europe was trading at $54.43 on Wednesday, coming comfortably under the established price cap.
“Ukraine is confident it’s time to review the oil price cap given the current market price on Urals is lower than $50 USD per barrel. This decision should ensure a drastic reduction in Russia’s income to finance the war, mass atrocities, and destabilization in Europe and elsewhere.” Ukraine’s foreign minister tweeted Thursday afternoon.
Also Read: Why The Ukraine War Is A Watershed For The Future Of LNG
Analysts have said that The Biden Administration is likely to oppose lowering the current crude oil price cap on Russian crude oil.
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