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By imposing an oil price ceiling, the West seeks not so much to limit Russia’s windfall profits as to gain access to domestic hydrocarbons on equal terms with Asian buyers, according to experts interviewed by Izvestia. As arguments, they cite information that the marginal cost continues to rise as it is discussed, plus for a number of European countries and Japan, the embargo will be eased. The decision on the price ceiling was expected on November 23, but there is no information about it yet. According to the latest data, the US and its allies discussed the $60-70 per barrel bar. However, Russian President Vladimir Putin said: our country will not supply oil to countries that will introduce a price ceiling. In the near future, we can expect a decrease in exports of black gold by 0.7-1.2 million barrels per day, but a significant part of this volume is likely to be redirected to Asia, analysts believe.

Ceiling with reservations

The US Department of the Treasury circulated guidance on the implementation of the policy of limiting the price of oil of Russian origin within the framework of the agreements of the G7 countries. As follows from the document, the idea of ​​introducing a ceiling has become much softeralthough the limit has not yet been officially announced.

The US Department of the Treasury indicated that “shipping, freight, customs and insurance costs are not included in the marginal price and must be billed separately at commercially reasonable rates“. It follows from the document that after Russian oil has cleared customs “in a jurisdiction other than the Russian Federation”, the price restriction does not apply to further sale on land. But if the fuel is again exported by sea “without significant processing outside the Russian Federation, the price cap still applies.”

Russian oil tanker “Polar Rock” in the Barents Sea

Photo: Global Look Press/Komsomolskaya Pravda

In the guide additional concessions are provided for a number of EU countries and Japan. For example, “certain operations” are allowed, related to the import of Russian oil to Bulgaria, Croatia or EU member states without access to the sea. Until September 30, 2023, Japan is allowed to transport crude oil produced under the Sakhalin-2 project, provided that it is intended only for import into this country.

It will also allow unloading from ships carrying Russian oil in case of emergencies related to the health of their crew members or a threat to the environment. But the introduction of a price cap on oil does not lift the ban on its imports into the United Statesexplained in the document.

Floating drilling rig

Floating drilling rig “Northern Lights” in the waters of the Kola Bay

Photo: TASS/Lev Fedoseev

It says that Washington expects the announcement of the maximum price for Russian oil “in the near future”. Earlier, The Wall Street Journal, citing its sources, reported that a meeting of representatives of 27 EU countries is scheduled for November 23, which will try to unanimously agree on a ceiling. At 19:30 Moscow time there was no news about the results of the meeting. According to the newspaper, the US and its allies are planning to agree on a ceiling no higher than $60-70 per barrel.

obvious and probable

Although the embargo on Russian oil will come into force on December 5 along with the price ceiling, experts believe that this will have little effect on exports from Russia.

“It is already clear today that both Russian companies and firms from friendly countries can insure Russian ships. For example, in India, an insurance pool of $60 million was created specifically for insuring Russian oil transportation. In addition, in a document distributed by the US Treasury, the story of the mixing of Russian oil with any other is written very superficially, which allows you to interpret this aspect in different ways– said Ekaterina Kosareva, managing partner of WMT Consult.

According to Alexander Frolov, Deputy General Director of the National Energy Institute, the marginal prices for domestic black gold will be set at a level favorable for the Russian Federation.

OPEC logo

Photo: RIA Novosti / Alexey Vitvitsky

— After the OPEC+ agreement reduced Russian production quotas by 500 thousand barrels, our Western partners began to discuss a higher level of marginal prices. It turns out that they are building this system in such a way that it would be beneficial for Russia and we would want to join it. And they are trying to sell to their audience as a deterrent to receiving income from the Russian Federation, the expert said.

They are trying to adjust the ceiling to the real selling price of Russian oil in the Asia-Pacific countries, which is now just approaching $70, Valery Andrianov, associate professor at the Financial University under the Government of the Russian Federation, an expert at the InfoTEK analytical center, agrees. Given that this does not include transportation and insurance costs, we can say that this measure does not change anything for the Russian Federation, the expert said. In his opinion, in this case, the price ceiling may not reduce, but, on the contrary, potentially increase the export of Russian oil.

According to Valery Andrianov, The West itself creates a loophole to bypass the embargo by imposing a marginal cost. If oil is subject to a price cap only when it is first purchased by a buyer on land, it turns out that no one forbids the resale of this fuel.

Oil storage company “Transneft” in Ust-Luga, Leningrad Region

Photo: Global Look Press/dpa/Igor Grussak

However, Earlier, President Vladimir Putin said that Russia would not supply oil to those countries that would limit its prices. Which means the goal set by the West will not be achieved – the flow of raw materials will continue to go mainly to Asiaand it is this region that will gain competitive advantages in the global economic struggle, Valery Andrianov emphasized.

Izvestia sent inquiries to the Ministry of Energy, Rosneft, Gazprom Neft, Lukoil, Surgutneftegaz and RussNeft.

The embargo from the West in the form under discussion could lead to a reduction in exports by 1.2 million barrels per day, with 0.5 million could be redirected to Asiasays Alexander Frolov.

The head of the Energy Development Center, Kirill Melnikov, estimated the potential reduction in offshore oil exports in December-January at 1 million barrels per day.

This is a reduction of about 20%, which will be significant for the market. Deliveries to friendly countries will continue, which will provide tankers and insurance coverage for this, primarily to China, the expert believes.

Export of Russian oil to non-CIS countries in 2021 amounted to 4.62 million barrels per day. As the former head of OPEC, Mohammed Barkindo, noted earlier, the total volume of supplies of oil and oil products from Russia to the world market is about 7 million barrels per day.

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