Chinanews.com, December 3rd, up to 60 US dollars!

The boots of the West to limit the price of Russian oil have finally landed.

After the European Union finally overcame the resistance of hardline Poland on the 2nd to finalize the Russian oil export price ceiling agreement, the United States also couldn't wait to release a joint statement of the Group of Seven (G7) and Australia on the same day, also announcing that the Russian oil price cap would be set at a price limit of 10 per cent. Bucket $60.

EU: Walking a tightrope

　　Since the outbreak of the Ukraine crisis, Western countries such as the European Union and the United States have imposed multiple rounds of sanctions on Russia's energy industry, which has also suffered a certain degree of backlash.

In order to avoid backlash, Western countries have come up with the idea of ​​a price cap, which aims to reduce Russia's oil revenue while preventing global oil prices from soaring after the Russian crude oil embargo takes effect.

　　However, "setting an appropriate price ceiling for Russian oil is difficult to walk on a tightrope," according to the analysis of the US "Wall Street Journal".

　　On the one hand, it is difficult to adjust the opinions within the EU.

The European Union initially contemplated a price ceiling for Russian oil of $65 to $70 per barrel.

Poland, which is tough on Russia, is pushing for a lower price ceiling to deprive Russia of more oil revenue.

Greece and Malta want price caps set at around $70 to protect their huge shipping industries.

　　As far as Russia is concerned, it is also difficult for the EU to judge the tipping point at which Russia may retaliate, which may be one reason why the EU took so long to agree on a price ceiling.

If the price cap is set too low, Europe could lose services such as insurance for Russian oil exports.

Moreover, the more the oil price cap hurts Russia, the greater the risk that the mechanism will backfire on the oil market.

　　The negotiations lasted extremely difficult for several months, and it was only at the last moment that Poland relented and agreed to cap the price at $60 a barrel.

The final compromise also came as the deadline loomed as the EU's embargo on most Russian oil imports came into force on the 5th.

　　However, several hard-line European countries led by Poland believe that the price ceiling is not enough to damage Russia's export revenue. The economy and key figures impose new restrictions.

　　"We are working on the next round of sanctions, which will be painful and costly for Russia," said Polish ambassador to the EU Sardos.

　　Poland has also successfully negotiated regular reviews of price ceilings to ensure it closely tracks the market.

America: secretly happy

　　After the 27 EU countries reached an agreement on the Russian oil price ceiling, the United States on the other side of the ocean couldn't wait to announce the joint statement that had been prepared long ago.

The G7 and Australia also agreed to cap Russian oil prices at $60 a barrel, the statement said.

　　The Group of Seven finance ministers reached an agreement in September to set a price ceiling for oil exports to Russia.

According to the agreement, the G7 will impose a price limit on Russian crude oil from December 5, and a price limit on Russian refined petroleum products from February 5, 2023.

　　The White House of the United States also welcomed the agreement immediately after the EU reached an agreement on Russia's oil price ceiling, saying that the agreement showed the EU's firm determination to oppose Russia's military actions.

U.S. Treasury Secretary Janet Yellen, one of the promoters of the price cap plan, also welcomed the agreement and praised Washington's partners in the European Union.

　　The U.S. is happy, however, more likely because the EU’s price caps reflect what U.S. officials have asserted as their main objective, which is the U.S.’s zeal to keep Russian oil flowing and prevent another round of energy price hikes that drive up domestic inflation.

　　The U.S. wants to keep millions of barrels of Russian oil flowing to global markets and avoid a sudden shrink in global supply as a new round of European sanctions on Russian oil exports takes effect.

And the shrinking supply is likely to send gasoline and heating fuel prices soaring in the U.S. and around the world, worsening already high inflation.

Russia: It's extortion

　　With regard to the West's setting of a price ceiling for Russian oil, Russia has stated that it will not supply oil and oil products to countries that impose price limits on Russian oil.

Proposals such as restricting oil imports from Russia and imposing price caps on Russian oil can only lead to a spike in oil prices like natural gas prices.

　　Slutsky, chairman of the foreign affairs committee of the Russian lower house of parliament, told TASS news agency that the EU's move would endanger its own energy security and violate market laws and regulations.

　　Russian President Vladimir Putin has emphasized that Moscow will not pay for the well-being of others at its own expense, nor will it supply energy resources to countries that limit prices.

He called the oil price cap the result of a "cheating trick and shameless extortion" against Russia.

　　Russian Deputy Prime Minister Alexander Novak also announced in October that Moscow would not supply oil to countries that try to artificially limit their costs through price cap mechanisms.

At the Russian Energy Week forum, the deputy prime minister also noted that prices should be formed in a market-based manner, taking into account the balance between supply and demand.

Novak called the proposal to cap Russian oil prices "absolutely ridiculous".