Europe Confused, US Impatient

Jakarta, CNBC Indonesia – The Group of Seven or G7 countries will immediately implement a policy of limiting the price of Russian oil exports by sea in 5 next December. However, it is unclear what the upper limit is.

A senior US Treasury official said the G7 should soon announce price caps on Russian oil exports and the coalition might adjust those levels several times a year.

Meanwhile, these restrictions aim to reduce the income of Russia which is currently fighting in Ukraine, without reducing the flow of oil to global markets while protecting prices from spikes.



Restrictions on exports of Russian oil products will begin on February 5.

The Treasury official said the European Union was consulting members on price caps.

“Our hope is that they will complete those consultations soon and put us in a position where our entire coalition can announce a price,” the official said. ReutersWednesday (23/11/2022).

The G7 price cap will allow the companies to provide services including insurance, shipping and financing of imports of Russian oil to coalition members, as long as their purchases of petroleum fall below the price cap.

The coalition has agreed to fix a fixed price on Russian oil rather than a floating rate at a direct discount to the oil price index.

The official said Washington did not expect Russia to retaliate by withholding oil exports, as Russian President Vladimir Putin had warned would happen. Such a move could send world oil prices higher, but risks damaging Russia’s oil fields.

“We have no reason to expect them to do that because, ultimately, it’s not in their interest,” the Treasury official said.

Meanwhile, as the EU and the United States impose bans on Russian energy imports, big buyers including China and India have been scooping up Russian oil at a discount.

“Every action they take to raise prices will have an impact on their new customers, customers like India and China that they (Russia) want to keep as oil customers in the future,” the US official said.

[Gambas:Video CNBC]

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