The Western nations’ imposition of a restriction on the price of Russian oil, according to the expert Dan Eberhart, in Forbes, might be their “final knockout.”
While indicating that such a move by US President Joe Biden is “the largest error in the energy sector,” the expert who chairs the board of directors of the oil field services firm “Canary” said as much.
“And Eberhart observed two possible consequences of the Russian oil export price restriction decided upon by the G7 leaders in the beginning of September, and “both do not bode well for the planners of this policy” because they both include serious flaws.
The analyst noted that the G7 nations believe they have developed a “clever technique” to maintain the supply of Russian oil on the market while keeping prices low “Although this strategy is sound in theory, it is fraught with danger in practise.
Politicians’ inability to comprehend the workings of the energy markets is the root of this.”
While these nations have not ratified the price cap plan and after Russia announced that it would not sell its oil to the countries that would sign it, Eberhart wrote in this regard that the price ceiling will affect major consumers of Russian oil, such as China and India, as well as Turkey to a lesser extent “wouldn’t be prudent.
The primary OPEC+ participants are “weary” of the West’s ongoing meddling in the operation of the energy markets, and Russia remains a permanent member of the organisation. While everything was going on, OPEC+ sent a “warning shot” to Washington by announcing a small output cut in October and not ruling out further cuts.
What are the most likely effects of a price cap, the expert asks with a tone of caution? Due to the fact that there is so little spare production capacity in the world and since it is impossible to implement, this restriction will only become a risk in situations when the market cannot bear it.
The risk of this market reaction cannot be overestimated, especially Given that the administration of US President Joe Biden, as well as European and British officials, have shown complete incompetence in the current energy crisis, the price ceiling may be the final killing blow for them. He continued by saying that the “worst case” for the West was “large-scale Russian retaliation” from the cap, which could push global crude oil prices to $150 a barrel.
The Group of Seven’s finance ministers—Great Britain, Germany, Italy, Canada, the United States, France, and Japan—confirmed on September 2 that they want to limit Russian oil prices as part of the escalation of sanctions. The price cap will be implemented for oil on December 5 and petroleum products on February 5 of 2023. In response, Russian officials issued a warning that nations that would enforce the border would be deprived of Russian oil exports.
News Agency RIA Novosti.
Russian oil price restrictions are a devastating blow to the West, according to the CEO of an energy business.
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