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According to Intermodal’s Mr. Alexandros Christakoudis, from the Tanker Chartering department, “in the past June, European Union decided to ban both seaborne imports of Russian oil and the provision of specific services derived from Russian oil shipments, in particular insurance and reinsurance industries which EU companies do dominate. The US authorities, which had already banned direct imports of Russian oil, shudder at the ban which would cause oil prices to spike by plunging most Russian exports”.
Mr. Christakoudis said that “accordingly, States of great sovereignty, strived towards the tool of capping the price of Russian oil, aimed at pinching Russia’s reserves whilst avoiding a spike in oil prices. However, the mechanism’s high price ceiling and its inability to compel Russia’s affairs with Asia-top tier- customers, undermine its ability to deprive Moscow of substantial revenue and aggravate both political and economic issues against Ukraine”.
“When the West announced on December 2nd, that they had agreed on a $60 price cap on Russian oil exports, they proclaim it as a valiant achievement in energy stability. But one who thinks this would be a significant tap into Russian oil revenues—and the administration’s ability to fuel its war by bringing to heel Ukraine—was likely to be disappointed. The price cap agreed on by the European Union and quickly endorsed by the United States, G7, and Australia was not bold enough to significantly have an effect on Russian revenues or hamper the conduct of the war. After all, Russian oil has sold at prices in the $60 range for the last several years. Moreover, since Russia’s February invasion of Ukraine, global trades have already limited their offtake of Russian crude to some extent. When countries such as India and China snapped up the surplus, they negotiated steep discounts while the discount for Urals crude, the main Russian benchmark—nearly $40 per barrel compared with Brent oil in the early months of the war—slowly dropped into the low $20 per barrel range, allowing Moscow to continue thriving”, Intermodal’s analyst said.
“If the price cap starts to influence Russia, it could create political space for further actions by throbbing Russian energy revenues. This cap should not be considered as an off energy policy tool- if Russia continues to wage its war, hence same should be seen instead as an interim measure until the next set of energy restrictions are to be imposed, including a lower price cap level”, Mr. Christakoudis concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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