Oil prices. Putin has a plan. He’s preparing another decree

thaipriusclubNovember 26, 2022

14 1 minute read

Oil prices. Putin has a plan. He’s preparing another decree

The decree prohibits contacts with both companies and countries that will join the price cap mechanism. This would in principle prohibit any reference to a price cap in contracts for Russian oil and its products, and would prohibit shipments destined for countries that have adopted restrictions, the agency said, citing sources.

The European Union is fighting for an agreement on how strict the price cap should be. Diplomats suspended talks Friday on a proposal to cap prices to around $65. per barrel, which is above the current price of Russian export oil. Disagreements over price levels persisted, and talks were postponed until Monday. As reported by The Wall Street Journal, Poland was in favor of a much lower amount – about $20.

It is unclear what effect a price cap or Kremlin decree would have on trade in response. That’s because formal supporters of the measure are already holding back on buying Russian oil. The policy is actually targeting other major consumers, such as India, who will not have access to Western insurance and other transportation services if they pay more than the capped price for Russian oil, Bloomberg explains.

India, Turkey and other big buyers have not agreed to the cap. At this stage, it looks like they will have no problem continuing to buy Russian oil, as the latest proposal so far has a ceiling well above current market prices. Let us recall that on December 5, the EU embargo on Russian oil is to come into force.