The European Union reached a deal Friday for $60-a-barrel price cap on Russian seaborne oil, but analysts have already questioned the effectiveness of the cap.
The European Union reached an agreement Friday for $60-a-barrel price cap on Russian seaborne oil, but analysts have already questioned the effectiveness of the cap.
The price cap will have “relatively little impact,” given that $60 is close to what Russia receives from China and India, said James Williams, energy economist at WTRG Economics.Global benchmark Brent crude saw its front-month February contract BRN00 BRNG23 settled Friday at $85.57 on ICE Futures Europe.
The current discount between Russian Urals and Brent reflects a combination of legal and sanctions “headaches,” reputational risk of doing business in Russian, and it also means that the price cap is “equivalent to Brent in the mid-$80s” — on par with current spot pricing, says Molchanov. So the price cap , “which is not really a cap, more a suggestion, is sort of $60, but not necessarily $60, and will be reviewed as early as January and then every two months thereafter,” Kemp said in a separate tweet.
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