By Alexander Miller, consultant in energy markets. Eurasia Business news, December 3, 2022

The G7 countries and Australia have reached a consensus to set a safety price ceiling on Russian oil at $60 per barrel. A similar decision was previously made by the European Union.

The G7 includes three EU countries (Germany, Italy and France), the UK, Canada, Japan and the U.S.

The official statement of the “Coalition to Limit Prices” was published on the website of the US Treasury. “Next week, the Price Cap Coalition will ban a wide range of services — including marine insurance and trade finance — that are related to the transportation by sea of crude oil of Russian origin, unless buyers buy oil for $60 per barrel or less than that price,” the statement said.

Countries that have joined the sanctions believe that setting a price limit on Russian oil will lead to a limit on Russia’s revenues for fighting in Ukraine. According to the G7, such a measure “is especially important for ensuring the supply of oil to low- and middle-income countries.

The G7 believes that Russia has several options for responding to the restriction on the price of oil: sell energy at a price below $ 60 per barrel or use the services of companies that are not part of the G7, but they are “limited in scale, more expensive and less reliable.”

Russia has previously said it would not sell oil to countries that would impose a limit on its value.

The ceiling on Russian oil prices will come into force on December 5 “or shortly after that date.” Also, the “Coalition to Limit prices” intends to set a ceiling on prices for Russian petroleum products from February 5, 2023.

The European Union agreed to limit oil prices the day before, on December 2. Poland slowed down the decision, demanding to set the limit at below $ 60. The head of the European Commission, Ursula von der Leyen, confirmed that the EU countries managed to reach an agreement. She believes that this “will help stabilize world energy prices, which will benefit developing economies around the world.”

Poland was in favor of limiting the price of Russian oil at $ 30 per barrel, and Greece – at $ 70. Poland’s ambassador to the EU confirmed that Warsaw had agreed to a limit of $60 per barrel. The announcement of the document is scheduled for December 4.

In October 2022, Russia supplied India with a volume of 946,000 barrels of oil per day, surpassing deliveries from Saudi Arabia and Iraq, The Economic Times reported. According to analysts, in October, Russia accounted for 22% of all crude oil imports into India. Iraq’s share of October deliveries is 20.5%, Saudi Arabia – 16%.

The Russian President Vladimir Putin pointed out that Moscow will not supply energy to countries that make political decisions that contradict the terms of the contracts. His press secretary, Dmitry Peskov, said that the Russian authorities were following the discussion of the issue of the oil price limit, but noted that Russia will “be guided solely by its own national interests.”

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