22 Sep 2023
The European Union (EU) nation that sets Russian Oil Price Caps is now banned from receiving oil shipments from Russia, according to an order issued by Russian President Vladimir Putin. According to him, nations that follow the price cap model are prohibited from importing any oil products.
The law, which was made public on Tuesday, said that the ban on Russian oil and Crude Oil Exports will begin on February 1 and last until at least July 2023. The ban on oil products will start when the Russian government decides, but it cannot start earlier than February 1.
Germany paid no attention to the oil boycott law since its exports are heavily dependent on Russian trade. In response to charges that Germany was ignorant of the oil crisis, a representative for the economics ministry stated that preparations for it began this summer.
According to the recent Crude Oil News, the G7 countries—Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States—as well as the EU and Australia, resolved to continue limiting the price of Russia's seaborne crude oil at $60 per barrel as of December 5.
The global supply system would be impacted, according to sources and Crude Oil Price News Latest, if in case Russia refused to sell crude oil at the cap price or reduced output. It will put pressure on energy-producing nations to match the demand, which would drive up oil prices.
What will be the effects of price cap?
The market has been waiting for Moscow's response to the $60 per barrel cap ever since the Group of Seven industrialized nations banned Russian supplies of seaborne crude on December 5.
The Russian Oil Price Cap currently requires everyone desiring to utilize a range of important western services, including insurance, to pay $60 or less. The goal of the action was to preserve the supply of petroleum to the global market while limiting the Kremlin's capacity to gather funds to sustain its war against Ukraine. The pricing level will be reviewed every two months.
Putin said last week that the country is now selling its petroleum at about identical prices, so the barrier won't produce losses for the economy, government, or energy sector of Russia. However, the nation's top Urals grade is now trading much below international standards.
However, according to Deputy Prime Minister Alexander Novak, Russia's oil production might fall by 500,000–700,000 barrels per day, or 5%–6% of the nation's current output, in the first few months of the next year.
The sources and media have access to industry data that shows Russia's daily Crude Oil Export output for the last month averaged 10.9 million barrels, which is the highest level in the preceding eight months. Novak predicted that Russia's yearly oil production will rise to 535 million tons this year. That equates to approximately 10.74 million barrels per day at a ratio of 7.33 barrels per ton.
Let us see how things changes once the ban is actually implemented. However, the only sure thing is that it will surely affect the world economy in some way.
For more such latest Polymer News, and other international news, stay tuned with plastic4trade.