EU countries have set a new upper limit on oil prices from Russia. Since yesterday, a maximum price of 100 dollars per barrel has been in force for products such as diesel. For heating oil, an upper limit of USD 45 per barrel applies. The question is whether this second ceiling is easier to maintain. “Here, too, we will see that he will still find his way to the market via a detour.”
Already in December, a price cap for Russian crude entered into force. This has proved difficult to apply in practice. For example, oil in India, for example, could still be processed into diesel and then make its way to Europe. Second Hans van Cleefan energy economist at Public Affairs, the price cap is more than a paper tiger anyway.
‘This works, but not everything can be stopped.’ The effect of the cap will therefore mainly be seen in the prices at which oil trades. “Perhaps it’s a good thing that some go to the market, otherwise prices will skyrocket. This will have to be compensated, and we don’t like this either.’
Diesel price
In the short term, the market price of diesel won’t change quickly, Van Cleef thinks. Huge stockpiles of diesel have been built up in Europe, and even Northern and Western European countries can easily obtain alternatives by sea. Eastern Europe doesn’t have that option, those countries got their crude directly through pipelines from Russia. ‘Problems will only arise if there are deficiencies there. This will drive up the price and we will notice the effects here too.’ According to Van Cleef, this will not be the case in the coming months.
The question is whether the new ceiling will affect the Russian economy. According to Van Cleef, this measure is one of many, the effects of which will become visible in the long term. ‘Companies like Shell and BP have already withdrawn, there are already many more sanctions and the Russians are already feeling it in their wallets. These effects will only increase.’
Feedback
Effective Feb. 1, Russian President Putin will no longer allow the export of Russian oil to countries that have price caps. It was in retaliation for the December price high and now it only applies to crude oil. This is likely to apply to other petroleum products as well. But that leads to scrap iron, Van Cleef thinks. “We don’t want it and he says we can’t have it. Such a countermeasure does not have much effect.’
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.
