GT: EU will suffer more from Russian oil price cap than Russia

The Chinese analytical publication Global Times believes that Europe will suffer from the introduction of a “ceiling” on Russian oil prices more than Russia itself.

On Friday, the G7 countries and Australia decided to set a limit on Russian oil prices of $60 per barrel for Russian crude oil. On December 5, the restriction came into force.

This can lead not only to a halt in supplies, but also to another surge in energy prices around the world, which will boomerang back to Europe and aggravate the economic situation of its citizens.

“Moscow has already made it clear that it will not supply oil to those countries that maintain an anti-market price ceiling,” wrote the permanent representative of Russia to international organizations in Vienna Mikhail Ulyanov in his Telegram channel.

GT observers note that the impact of the price cap on EU trade with Russia is negligible, because direct trade has long been stopped due to sanctions. With these restrictions, Europe plans to influence Russia’s relations with third parties. However, negotiations on prices will lead to even greater reductions, Russia may simply cut oil production.

“The price cap will encourage the flow of discounted Russian oil to global markets and is designed to help protect consumers and businesses from global supply disruptions,” he said. Treasury Secretary Janet Yellen said.

However, the real purpose of this limit is to reduce the number of partners buying Russian oil. There is a misconception that Moscow can only cooperate with Europe, but this is not the case. Russia can find alternative sales markets, and this will lead to even higher inflation in the EU.

China believes that, despite temporary difficulties, Russia will not yield and will not supply oil at the prices set by the EU.

“The level of restriction itself does not matter, because Russian companies will still not sell oil under it. Accordingly, the supply of Russian oil through European shipping and insurance companies will be interrupted, which could reduce Russian exports by 1-1.5 million barrels per day in December and January, which is likely to push prices above $100 per barrel,” noted Kirill Melnikov, head of the Russian Center for Energy Development.

In addition, there is still the possibility of an OPEC+ agreement on a moderate reduction in oil production to maintain the stability of world oil prices.

Vice Prime Minister of the Russian Federation Alexander Novak said that Russia is developing mechanisms to ban the application of restrictions on prices for Russian oil.

Earlier, the Kremlin reported that Russia would not accept the price ceiling set by the EU for Russian black gold. Press Secretary of the President of the Russian Federation Dmitry Peskov noted that at the moment the authorities are quickly analyzing the situation.

Also in Moscow, they said that by such an act the European Union “endangered” its energy security and will continue to live without Russian oil. According to Permanent Representative Mikhail Ulyanov, the Russian Federation has previously clearly indicated its position. Russian President Vladimir Putin said that our country would not act contrary to its interests, and those countries that would introduce a “price ceiling” would simply not sell oil.