/ Go to the mediabankOil rig / Go to the mediabankInternationalIndiaAfricaAs part of sanctions against Russia, the $60 per barrel price cap on Russian oil went into effect last December, together with a ban on seaborne exports. The G7 nations and Australia also capped Russian crude exports, with a review to take place every two months to keep it at 5 percent below the International Energy Agency benchmark.It would be unprofitable for the United States if the price cap for Russian oil were revised downwards, since this mechanism also affects prices for American producers, Sergei Kolobanov, Deputy Head of the Department of Fuel and Energy Sectors at the Central Center for Strategic Research told Sputnik.Kolobanov weighed in on plans by the Group of Seven (G7) nations this month to reevaluate the $60 per barrel price cap on Russian oil that went into effect on 5 December 2002, to determine whether any recalibration is needed.
"Even before the ceiling was imposed, [Russian] companies were able to move into new markets mainly through the provision of discounts, and this forced dumping, which intensified after the cap was introduced and has a downward effect on overall world oil prices," he stated.
Buying from Russia was more profitable than dealing with other suppliers’ higher costs, Kolobanov explained.
“Because of the Western embargo on Russian oil, the forced dumping is affecting the prices of US producers, including US and European oil companies, operating worldwide, which currently send a significant portion of their oil exports to Europe,” said the Deputy Head of the Department of Fuel and Energy Complex Economics at the Central Center for Strategic Research.
He added that the search for ways to transport oil from Russia other than by sea – after the European Union’s ban on seaborne exports – has driven up the costs of transporting raw materials in the world, further hitting the potential revenues of producers.Earlier in March, US Assistant Secretary of the Treasury, Elizabeth Rosenberg, said that the G7 countries intended to revise the price ceiling for Russian oil later in the month. Media reports indicated that some countries, such as Poland, Lithuania, and Estonia, are proposing to lower it from $60 to $51.45 per barrel. However, reports suggested that the G7 countries, in particular the United States, did not back a change to the Russian oil price cap.At the same time, according to Kolobanov, the countries that are now most actively in favor of lowering the oil price cap are not oil-producing states, and their statements are “to a high degree populist in nature”.RussiaRussia Building Up Shipping Fleet to Transport Oil Amid Price Cap Coalition14 March, 15:40 GMTAfter Russia launched its special military operation in Ukraine, the so-called collective West unleashed a sweeping sanctions campaign against Moscow. Actively searching for ways to limit Russia’s energy-related revenues, notably from oil and gas, the European Union imposed an embargo in December 2022 on Russian crude oil. Then, along with the G7 nations and Australia, the EU bloc agreed to a $60 per barrel price cap on Russia’s oil, to be reviewed every two months so that it can remain at 5 percent below the International Energy Agency benchmark.After that, Brussels agreed to the European Commission’s proposal of a $100 per barrel ceiling for Russian diesel fuel, and a $45 per barrel for discounted products such as fuel oil, with the measure going into effect on 5 February 2023. The self-harming sanctions came at a time of rising diesel prices as Europe struggles to secure imports from alternative sources.In response to the restrictions, Moscow banned the supply of Russian oil and oil products if the contract directly or indirectly provides for a price cap, in line with a decree signed by Russian President Vladimir Putin. At the same time, the presidential decree allows for the possibility of issuing special permits.In late December, Kremlin spokesman Dmitry Peskov warned that oil and gas price ceilings are unacceptable to Russia, and that the country will never agree to the destruction of market pricing.WorldPrice Cap on Russian Diesel to Raise Costs for Europe, Disrupt Logistics: Energy Expert8 February, 12:00 GMT