The European Union could not come to a consensus regarding the establishment of a ceiling on Russian oil.

This was announced on Thursday, November 24, by European Commissioner for Energy Kadri Simson.

“Yes, it is, the negotiations will continue,” the TASS official quotes.

The introduction of a ceiling price for oil was provided for by the eighth package of anti-Russian sanctions, which came into force on October 6.

As part of the initiative, it was planned to prohibit European companies from insuring and transporting raw materials from the Russian Federation by sea to third countries at a price above a certain limit.

Restrictions should come into effect as early as December 5 for Russian oil, and from February 5, 2023, they should also apply to oil products.

However, the price ceiling itself has not yet been unanimously approved by EU members.

Thus, most countries agreed with the proposed by the European Commission in the range of $65-70 per barrel.

However, Poland advocated a more than halving of the rate to $30 per barrel, the Politico portal reports, citing sources in diplomatic circles.

“The actions of Warsaw are easily explained - it does not receive oil from Russia by sea, which is subject to sanctions from the last package.

Poland receives Russian raw materials through the Druzhba pipeline, and the country does not earn money from sea transportation of energy resources.

Therefore, with the introduction of any ceiling, the Poles do not lose anything - unlike other countries of the union, ”Igor Yushkov, an expert at the Financial University under the Government of Russia, told RT.

At the same time, the Europeans are afraid of Moscow's negative reaction to such anti-market regulation, so they are carefully considering the price range for raw materials, the expert believes.

In turn, Russia does not plan to supply fuel to countries that will join the introduction of a price ceiling on energy resources, the Kremlin said.

“We proceed from President Putin’s position, from his position that we will not supply oil and gas to those states that will introduce and join the ceiling,” Dmitry Peskov, press secretary of the Russian President, emphasized.

According to him, at the moment it is difficult to predict what impact the EU initiative will have on the energy market.

Nevertheless, Moscow intends to analyze the situation with prices on world commodity markets before formulating its position on the issue, the Kremlin spokesman added.

It should be noted that exchange quotes react poorly to the ongoing attempts by the West to develop a mechanism to regulate oil prices.

During today's trading, a barrel of Brent oil on the London ICE exchange symbolically fell in price by 0.9% to $84.7 per barrel.

Such dynamics is explained by the fact that this level corresponds to the real price of Russian raw materials, which are sold at a discount during 2022.

“Initially announced by the EU, the range around $70 per barrel actually fixes the current price of the Russian grade Urals.

Therefore, the Russian Federation may well sell raw materials at such a price corridor, which means that there may not be a reduction in supply on the market, ”Fyodor Sidorov, founder of the School of Practical Investment, told RT.

If Russia nevertheless refuses to supply oil to importers who join the sanctions, this could lead to a global shortage of raw materials and a sharp increase in the value of the asset.

This opinion was expressed in an interview with RT by Finam Group analyst Andrei Maslov.

According to him, even a partial refusal of supplies from Moscow could deal a serious blow to all oil-dependent economies.

“Instead of Russia, other oil will come to the region, for example, from the Middle East, but it will cost much more, as Moscow will reduce exports and supply on the world market will noticeably decrease.

Against this background, most of the EU is in no hurry to accept the ceiling, and even the United States, which is not directly affected by the issue, is trying to calm the players and prevent the global energy crisis from worsening,” Igor Yushkov noted.

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In November, Washington eased a number of restrictions on Russia.

Thus, the US Treasury withdrew from the sanctions the supply of Russian oil to Bulgaria and Croatia and other EU countries that do not have access to the sea. 

“In the negative scenario, it was assumed that production due to restrictions from the EU and the US in Russia would be reduced by at least 1 million barrels of oil per day.

But this is not happening: it is profitable for our country to sell raw materials even at relatively low prices and maintain production capacity.

According to the results of October, despite the fact that exports to the Nordic countries sank by 90%, the decline in production did not exceed 2%,” Sidorov emphasized.

Illusory

 restrictions

According to analysts interviewed by RT, the price ceiling has never been used in world trade before and it will be problematic to put this solution into practice.

Meanwhile, other states - consumers of raw materials are unlikely to support this initiative, Stanislav Mitrakhovich, an expert at the National Energy Security Fund, is sure. 

“The main alternative buyers of Russian oil have not yet expressed their desire to join the restrictions.

In particular, the countries of the Middle East make money on the resale of Russian crude oil, while India and China trade in oil products made from Russian oil.

So it is unprofitable for the non-European world to refuse our raw materials in principle, ”said the interlocutor of RT.

At the same time, European companies may lose additional earnings, reminds Igor Yushkov.

Despite the fact that the European Union plans to soon abandon the purchase of Russian oil, today the leading positions in the sea transportation of raw materials are occupied by companies from Greece, Cyprus and Malta.

Once the price ceiling is set, Moscow may completely abandon their services, and they risk being left without a significant amount of work, the expert added.

“Western companies are now massively either transporting Russian oil to India and China, or insuring this cargo.

They do not want to lose this market either, because after they leave, profits will gradually move to companies from other countries - Asia, Latin America and Russia itself, ”said the analyst.

The very decision of the European Union to refuse to buy oil from Moscow, experts interviewed by RT, consider it risky for the EU economy.

In October, inflation in the euro area accelerated to 10.6%, once again updating the historical record.

The main contribution to the growth of the indicator is made by the constant increase in the cost of energy, explains Yushkov.

“Europeans are trying to fight inflation by raising the key rate, but this makes loans more expensive and reduces business activity, as well as leads to a reduction in production and drives the economy into a long recession.

Industry, which is already on the path of deindustrialization, bears the greatest costs.

Considering that the crisis may last for more than one year, it is extremely difficult to predict what will remain of the previously developed EU economy,” the expert concluded.