The reasons are investors' skepticism and worsening markets.
oil due to investor skepticism and rising risk in financial markets caused by oil volatility and central bank efforts to curb inflation. This is reported by Bloomberg.
Rather than stifle the Kremlin's oil revenues by imposing a strict price cap that would be enforced by a broad “cartel of buyers,” the U.S. and European Union are likely to agree to a softer, controlled cap at a higher-than-expected price. Only the G7 countries and Australia have agreed to comply, according to people familiar with the matter.
South Korea has also privately told the G7 countries it plans to comply, according to the sources. requirements G-7 representatives are also seeking to involve New Zealand and Norway in cooperation. But it is clear that India and China – Russia's most important trading partners – will not take part in this.
Read also: India will consider a proposal to introduce a price cap on Russian oil
An earlier version of the US plan, authored by Treasury Secretary Janet Yellen, considered capping the price in the range of $40 to $60 a barrel, with some officials seeking to keep that limit as close to the lower level as possible to achieve the key the goal is to reduce Russia's financial income.
But officials working on the plan are now debating the upper end of that range and higher, though some in the EU believe it would allow the Kremlin to continue to generate significant revenue from sales.
“The White House and the administration are maintaining implementation of an effective, strong price limit on Russian oil in coordination with the G-7 and other partners,” said the press secretary of the White House National Security Council Adrienne Watson.
According to her , this is the most effective way to ensure that oil will continue to enter the market at lower prices, which will greatly affect Putin's revenues, which are used to finance the war in Ukraine.
In response to a request for comment, a senior Treasury official said the U.S. had never discussed a price cap range with allies.
In September, Russia received approximately 15 billion dollars from the sale of oil. With this, it fueled its war machine in Ukraine, a flow of money that US and European leaders have been trying to stem since Russian President Vladimir Putinordered a full-scale invasion. But in a global market dominated by countries led by Saudi Arabia without democratic governments, a consumer-driven, single-producer-targeted price-cap mechanism could prove difficult to implement.
Also read: Russian oil profits hit lowest since invasion – Bloomberg
The change in US views on the price cap comes after Washington has pressured the Europeans for months to change their sanctions on Russian oil. The development is likely to add to the EU's frustration, with some officials saying they believe the US has focused more on increasing global oil supplies and has not always been as ready as Europe to take the economic hit from sanctions on Russia. .
The Finance Ministry says that setting a higher price limit could make it more likely that Russian oil will remain on the market, while Moscow's revenues will be significantly lower.
Putin has already said that Russia will not sell oil to anyone who participates in price capping.
A senior Treasury official says the Biden administration was ready for revenge from Putin.
Prices for energy – especially oil and gasoline – will play a huge role in the US midterm elections on November 8, which will be decisive in determining control of Congress.
President Joe Biden tried to curb the sharp rise in prices for US motorists after the Russian invasion, in particular by record U.S. oil stockpiles and public pressure on OPEC+ and refiners.
Doubts about capping Russian oil prices emerged early in Yellen's efforts on the issue, and intensified after the cartel OPEC+, which includes Russia, announced on October 5 an unexpected reduction in productionby 2 million barrels per day. Some US officials feared the move would undermine any price ceiling, and Biden even publicly accused the Saudi government of colluding with the Kremlin.
Also read: The world is forming a “shadow fleet” to transport sanctioned Russian oil – Bloomberg
The final price cap is expected to be announced by December 5, when EU sanctions on services such as insurance, brokerage and financial services come into force. assistance related to the transportation of Russian oil to international customers.
The Biden administration believes that the price cap will promote stability in the markets by ensuring the continued flow of Russian oil and allowing developing countries to buy it at reduced prices.
In order for the private sector to clearly understand the price cap mechanism, on relevant guidelines and instructions will appear on the website of the Ministry of Finance.
However, officials involved in designing the price cap were already concerned that it could backfire, causing even more volatility in global oil prices. On Monday, Yellen warned of a “dangerous and volatile environment” developing in the global economy, including soaring energy prices and turbulence in financial markets.
In such a situation, she said, “risks to financial stability could materialize” in the US.
Also read: Oil price rises after Saudi Arabia's announcement that OPEC is forced to cut production
The price cap mechanism adopted by the EU will require third-country buyers of Russian oil to agree to pay less than the cap to ship and insure their cargoes with European companies. US and EU officials believe that this approach will work because the key link in cargo insurance is the International P&I Clubs group, which covers 90% of the world's ships. Most of the group's clubs are based in London with European organizations or cross-insurance partners, meaning they are subject to EU rules.
Companies that insure Russian oil cargoes at prices above the limit will fall under new EU sanctions. They include a ban on shipping and a provision that bars vessels from accessing European services for all oil, regardless of its origin, if the tanker is carrying Russian crude oil sold above the limit. This provision is designed as an incentive for buyers to comply with the limit.
However, some industry experts believe that such leverage is insufficient, as Russia can access alternative vessels and insurance services, and in response will refuse to export to customers who comply with the restriction.
Similar considerations in sulfur, according to sources, have already been presented by representatives of the Exxon Mobil Corporation.
The EU price cap plan depends on its acceptance by the G-7. If the G-7 fails to reach agreement internally, the outright ban on Russian oil services, which the EU adopted in June, will come into effect.
The U.S. pushed for the curbs in part because officials feared a spike in global oil prices caused by the EU ban.
The U.S. has also privately discussed using the tools with allies, according to people familiar with the progress of the talks, which took place earlier this year. coercion, such as secondary sanctions together with restraint. However, U.S. Deputy Treasury Secretary Wally Adeyemo has publicly ruled out that option, increasing skepticism that the price cap scheme will work.
Also read: US to produce record oil from next year – Jennifer Granholm
One EU official said it was hard to imagine the restrictions working without an enforcement mechanism, not least because that key buyers such as India, China and Turkey are unlikely to sign any deal.
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A decision is not expected before the US election. The EU aims to set the price cap around November 25, about 10 days before the bloc's new sanctions on Russian oil delivery services take effect.
