![]() ![]() The price cap therefore particularly benefits importers from these countries by helping stabilize global oil prices. Second, emerging market and low-income economies are generally more exposed to price shocks than advanced economies. Accordingly, it is prospective buyers elsewhere-especially emerging markets-that stand to gain directly from low-cost Russian oil. First, countries in the Price Cap Coalition, are already committed to prohibiting or phasing out imports of Russian oil and will not directly benefit from a lower price. These economies are well-positioned to benefit from the price cap’s stabilizing effect on prices for two reasons. The rise in energy prices has proven especially harmful to those economies with heightened vulnerability to energy price shocks. Russia’s unconscionable war in Ukraine has disrupted energy markets and caused widespread economic hardship, from natural gas shortages in Europe to elevated oil prices around the globe. The price cap will be of particular benefit to emerging markets and low-income economies that are highly exposed to rising energy prices. ![]() To accomplish this goal, the EU and the other countries in the Price Cap Coalition designed the price cap to maintain the flow of Russian oil at a discounted price. The price cap policy is intended to maintain the supply of Russian oil to the global market while reducing the revenues the Russian Federation earns from its oil sales, particularly in light of elevated prices caused by Russia’s war of choice. On February 5, 2023, this ban on services will extend to the maritime transport of Russian-origin petroleum products unless the products are sold at or below a price cap to be announced before February 5, 2023. Importers who purchase Russian oil at or below the price cap will maintain access to an array of Coalition-country services vital to the oil trade. Next week, the Price Cap Coalition will ban a broad range of services-including maritime insurance and trade finance-related to the maritime transport of crude oil of Russian Federation origin (“Russian oil”) unless purchasers buy the oil at or below $60/barrel. This policy is especially critical to make oil supplies available in low- and middle-income countries hit hard by the effects of Russia’s war. The price cap is an important tool to restrict the revenue Russia receives to fund its illegal war in Ukraine, while also maintaining a reliable supply of oil onto global markets. Following agreement by the 27 Member States of the European Union (EU), the members of the G7 (the United States, Canada, France, Germany, Italy, Japan, and United Kingdom) and Australia (collectively, the “Price Cap Coalition”) are joining the EU in adopting a price cap of $60/barrel on seaborne crude oil of Russian Federation origin. ![]()
0 Comments
Leave a Reply. |