If the goal is to hit the Russians, the effect of an oil price cap is limited. This says the internal economist of BNR, Han de Jong. “That price limit is close to the price at which Russian oil trades. Some of Russia’s oil trades below that ceiling. So it has no effect.’
According to De Jong, the maximum price is even higher than the production costs of Russian oil. With the logical consequence that Russia can continue to export oil and also continue to make profits. According to De Jong, it even seems that the price cap only perpetuates the current status quo. “It’s not easy to hurt the Russians and spare ourselves.”
Global streams
An alternative to Russian oil would mean a “significant” shift in global oil flows, something the economist calls a massive logistical operation that, due to its size and complexity, could drive up oil prices. “There is a big risk it will cost us money while it will make money for the Russians.”
It should be noted that oil prices have risen rather than fallen in recent months. According to De Jong, this could have two causes: either the oil industry is not worried, or China is not doing well. Because that country remains the largest importer of oil, and is now trapped in its own zero-Covid policy and lockdowns. “If China opens up, the price could go up considerably.”
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Source: BNR
Sharon Rock is an author and journalist who writes for 24 News Globe. She has a passion for learning about different cultures and understanding the complexities of the world. With a talent for explaining complex global issues in an accessible and engaging way, Sharon has become a respected voice in the field of world news journalism.
