EU embargo on Russian oil and G7 price cap take effect

Yet skepticism about the likely effectiveness of the measures stems in part from the fact that the United States and European countries are asking European shippers and insurers to enforce it by refusing to handle cargoes priced above $60 a barrel. .

For starters, analysts say Russian oil price data has become scarce in recent months. Few or no transactions are reported, and prices quoted in the market “are mostly based on hearsay,” said Viktor Katona, an analyst at Kpler, a research firm that tracks shipments.

Russia has said it will not agree to a price cap and has threatened to cut off supplies to countries that comply with the arrangement. If Russia follows these steps and restricts oil because it has natural gas flows to Europe, it could wreak havoc on oil market markets.

“These measures will undoubtedly have an impact on the stability of the global energy market,” Kremlin spokesman Dmitry S. Peskov said on Monday, according to Tass, Russia’s state-run news agency, referring to the news. embargo and price caps. .

Analysts say Russia has built a so-called ghost fleet of old tankers to export its oil and avoid EU sanctions, but they doubt it can assemble a large enough flotilla. If not, Russia may have to start shutting down the wells.

The G7 countries – the US, Canada, Britain, Germany, France, Italy and Japan – have already mostly stopped buying Russian oil, so any downside issues Russian exports risk damaging the economies of countries like China and India, big customers who have refused to condemn Russia’s invasion of Ukraine.

The impending embargo and price cap were the main reasons why OPEC and its allies, including Russia, decided on Sunday to leave their oil production quotas unchanged. The group, known as OPEC Plus, appears to have decided there is no reason to change its policy amid the many economic uncertainties, including a faltering economy in China and crippling inflation around the world that fuel fears of a recession.

Many analysts believe that Saudi Arabia, the de facto leader of the producer group, is looking for a price of around $90 a barrel for Brent. The Saudis, market watchers say, would likely cut production, regardless of protests from Ukraine and its allies, if prices fall significantly from that level.