The G7 proposal is for Russian oil prices between $60 and $70 a barrel. Last week, some EU member states proposed adopting the same figure. This is currently more than a barrel of Russian oil.
Several countries, including the Baltic states, disagree, and Estonia has threatened to veto the decision. Poland reportedly said the limit should be $30.
LHV economic analyst Christo Abb told Monday’s “Actuale Camera” that the $60-$70 cap will not have the desired effect.
“This price adjustment seems to have been chosen because of inflation rather than reducing production or reducing Russian income,” he said.
To be effective, the ceiling cannot be higher than the breaking point. But this raises another question: where exactly is this point?
“The prices of various Russian producers are hovering around $45-50 per barrel, which will be the break-even point for Russian oil producers. These break-even points are very different,” Aab said.
This move may not be effective anyway, he said, as other countries will find loopholes to buy Russian oil.
Fuel seller Neste told AK that the market is currently affected by three factors.
“One is, of course, the EU’s price hike. In the meantime, OPEC+ countries will meet later this week to discuss how to compensate for rising production and the deficit caused by the loss of Russian oil,” Neste’s marketing and communications manager Risto Sulste said.
The third point is China and its zero-covid policy. His strict control measures reduced oil consumption by 40 percent.
“If China can’t contain Covid and consumption and demand are low, this could lower the price of oil. If this price drop reaches the finished product price, it will certainly be reflected in our prices,” Suloste said.
While gasoline consumption usually decreases during the winter months, demand for diesel may increase this time of year, driving up prices, as it can be used for heating purposes instead of gas.
AK reports that European slaughterhouses have limited diesel capacity.
Round K: OPEC meeting could boost prices.
Oil prices fell on Monday morning, with Brent crude trading at $81, compared to last week’s range of $83-90.
Fuel prices will drop in the short term due to lower consumption in China, but the Russian fuel embargo, which will take effect on December 5, could increase prices in the long term, said Circle K motor fuel price manager Andrej Sass.
“Oil prices actually turned down mainly due to the news from China. Some of the impact was due to the recovery in international production and the corresponding reduction in demand,” he said.
All eyes will be on OPEC’s December 4 meeting, he said. The group may decide to reduce the production to increase the price again.
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