Ukraine predicted to Russia on Saturday that its economy would be destroyed by the cap on the price of its oil, in which the European Union, the G7 and Australia agreed, in order to limit Moscow’s means to finance the conflict in Ukraine.
“We still achieved our goal and Russia’s economy will be destroyed, and it will pay and be responsible for all its crimes,” Ukraine’s presidential chief of staff Andriy Yermak said on Telegram.
On Friday, the 27-nation European Union, the G7 and Australia had agreed after weeks of discussions on “a maximum price of US$60 for crude oil of Russian origin transported by sea,” according to the terms of a joint press release. . release.
“The culmination of months of effort” for the EU
In this first official reaction from Kiev, Andriï Iermak pointed out this Saturday that “it would have been necessary, however, to lower (the maximum price) to $30 to destroy (the Russian economy) even faster.”
The price of a barrel of Russian oil (crude from the Urals) currently fluctuates around 65 dollars, just above the European ceiling, which implies a limited impact in the short term.
US Treasury Secretary Janet Yellen, however, welcomed the announcement, which “is the culmination of months of effort by our coalition.”
Starts Monday of the EU embargo
The agreement was possible thanks to the consensus reached on Friday by the Twenty-seven of the European Union. The mechanism will enter into force on Monday “or very soon after,” specify the G7 and Australia. In fact, this Monday the EU embargo on Russian oil transported by sea begins.
Thus, it will only be possible to continue delivering oil sold by Russia at a price equal to or less than $60. Beyond this limit, it will be prohibited for companies to provide services that allow maritime transport (freight, insurance, etc.).
Russia, the second largest oil exporter in the world, had warned for its part that it would no longer deliver oil to countries that would adopt this ceiling. Without this cap, it would be easy for you to find new buyers at the market price.
“We will be ready to review and adjust the maximum price if necessary,” say G7 and Australia in their press release. And a ceiling must also be found for Russian oil products from February 5, 2023.
Sending a “strong political signal” to Putin
The European embargo comes several months after the one already decided by the United States and Canada. But Westerners also have to contend with the interests of powerful British insurers or Greek shipowners.
The instrument proposed by Brussels foresees adding a limit set at 5% below the market price, in the event that Russian oil falls below 60 dollars.
In fact, some experts fear a destabilization of the world market and wonder about the reaction of the OPEC producing countries. “There has never been a ceiling in the price of oil. We are in the unknown,” alarmed Phuc-Vinh Nguyen, stressing that the reaction of OPEC countries or large buyers such as India and China will be crucial.
The only certainty, according to him: a cap, even at a high price, will send “a strong political signal” to Vladimir Putin, because, once in place, this mechanism can become hard.
Source: BFM TV
