Alexey Gromov, Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the Oil and Capital Internet portal on the draft Russian response to the introduction of a "price ceiling" on offshore of Russian oil supplies.
The Russian authorities decided at the legislative level to forbid prescribing the "ceiling" of prices for Russian oil in contracts. This was reported to Vedomosti by a source familiar with the text of the document, the information was confirmed by two interlocutors close to the government.
“It is not yet known in what edition this document will be adopted, since we are fighting for our oil to be sold on the world market according to market principles. If the cost of Urals is at the level of $43-45 per barrel, then it will continue to be sold at this price.
This means that India, China and Turkey will still be able to buy Russian oil below the price ceiling. If they were forbidden to do this, then it would be called the maximum discount on oil.
Another thing is to demand from Russian companies the refusal of contracts, where any condition will be written in compliance with the price ceiling. Moreover, it is not the limit figure itself that is important, since we know that this indicator is dynamic, but the very mention of the need to comply with the price ceiling.
It is natural that an official government ban will be imposed on compliance with price cap transactions. This is a step ahead of the world's largest oil traders who work with Russian oil.
As for the ban on the supply of Russian oil to those countries that have decided to officially support the price ceiling, I am cool about this idea, since it will not have a real economic effect.
Summarizing the above, I want to emphasize that such a response from Russia to the introduction of the "ceiling" was expected. It is good that they did not support the initiative related to the introduction of a maximum level of discount on Russian oil. It would definitely be a non-market and erroneous decision.”
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