According to Politico on Tuesday:
“EU (regimes agreed on Russian) sanctions…including a price cap on (its) oil sales.”
Last week, unelected European Commission president von der Leyen proposed an 8th EU round of illegal sanctions on Russia, on Wednesday, saying:
“We moved quickly and decisively (sic).”
“We will never accept” the UN Charter right of self-determination for Donetsk, Lugansk, Kherson and Zaporozhye.
“We are determined to continue” self-inflicting harm on EU nations and people by ineffective sanctions war on largely self-sufficient Russia.
An EU ban on imports of Russian oil takes effect in December.
Their ruling regimes further shot themselves in the foot by attempting to halt imports of other vitally needed Russian commodities.
No specific price cap on Russian oil was announced so far.
Last month, Russian Deputy Prime Minister, Alexander Novak, said that exports of oil and petroleum products would be halted to nations involved in capping the price of its oil — calling the scheme “completely absurd,” adding:
Russian oil “will be delivered…to countries that operate according to market conditions.”
According to Hungarian Foreign Minister, Peter Szijjarto:
“We negotiated hard and ensured that the oil price cap is not applicable to pipeline deliveries.”
“This is exactly how we buy crude vital for our energy security, and, in case of an emergency, (import) oil delivered by sea.”
“We managed to make nuclear energy exempt from sanctions.”
They’re “not applicable to construction of (new reactors of Hungary’s) Paks nuclear power plant.”
“Not a single organization important for cooperation in nuclear research was included into the sanctions list.”
Formal agreement on an 8th round of EU sanctions on Russia, including an oil price cap, is expected to be announced on Wednesday.
In early September, I quoted Institute for the Analysis of Global Security’s Gal Luft on capping the price of Russian oil, saying:
It’s…a ridiculous idea in my view,” adding:
“That’s not how the oil market works.”
“This is a very sophisticated market.”
“You cannot force the prices down” artificially.”
“It ignores the fact that oil is a fungible (interchangeable) commodity.”
“Europeans and Americans that are talking about $40 a barrel, what they’re going to get is $140 a barrel.”
“You cannot trick the laws of supply and demand, and you cannot defy the laws of gravity when it comes to a fungible commodity.”
Last month, oil analyst, Neil Atkinson, explained the following:
“Something like this could only work if you get all key producers and crucially all key consumers working together and then finding some way of enforcing whatever plan you come up with.”
That clearly won’t happen.
Energy Aspects analyst Amirita Sen agreed, saying:
Price cap consensus “is not going to work in practice,” adding:
Believing that world community nations will back the US-dominated G7 scheme is “the biggest misconception” on an issue as important as energy security.
In July, JP Morgan Chase analysts warned that if Russia cuts crude output in response to a Western price cap, “the price could rise to $190 dollars a barrel with a 3 million-barrel daily cut.”
It could rise “stratospheric(ally)” to $380 a barrel if 5 million barrels are kept off the market.
Global oil market tightness “is on Russia’s side.”
In late September, oil analyst Matt Smith agreed that capping the price of Russian oil requires a “united front with the commitment of all global buyers.”
That “seems highly unlikely.”
“The West may want a price cap, but Russia has allies in the Middle East, Asia” and elsewhere.
And this from energy analyst Ben Cahill:
It’s “presumptuous to assume Russia will accept far lower prices.”
China, India and other Russian allies are unlikely to go along with EU policy on Russian oil.
“(M)ultiple prices” for Russian oil may follow and EU cap.
“(M)ontering and enforcing (it) will be challenging.”
Oil buying nations have “strong incentives to bend or break rules.”
And if an EU cap is imposed “economic theory will collide with the messy reality of the market.”
The end result of a cap is that it’ll be unlikely to “dramatically cut Russia’s oil revenue.”
And this from OilPrice.com on Wednesday:
“Many analysts and experts doubt that the price cap would serve its dual purpose of cutting revenues for Putin while keeping Russian oil flowing because top importers China and India haven’t signed onto the price cap, and because Putin could simply make good on his promise to halt all energy supply—including crude, fuels, natural gas, and coal—to countries that sign up to cap the price of Russian oil.”
Along with oil and gas, Russia is rich in coal, iron ore, timber, gold, silver, diamonds, titanium, copper, rare earths, aluminum, uranium, copper, palladium, platinum, nickel, and many other commodities — worth an estimated $75 trillion.
The Kremlin has lots of trump cards to play against the US-dominated West.
Along with an arsenal of unmatched super-weapons for self-defense, if Russia halts exports of vitally needed commodities to hostile Western states, their weakened economies will sustain more damaging body blows than already.