EU price cap on Russian Oil is fraught with problems
Posted on 03 Dec 2022; 11:30 PM IST. Last Updated 03 Dec 2022; 11:30 PM IST.Summary: This article explains the many problems that lie dormant in the EU price cap on Russian Oil.
The recent EU price cap of $60 USD / barrel on Russian oil is fraught with many problems. The EU political leadership should have noted that Oil did not sell below $70 USD / barrel, even for high volume consumers like India, China (who receive steep discounts), in the summer of 2022. The Oil futures for 2023, is around $90 USD / barrel.
Imposing a price cap of $60 USD/ barrel on Russian Oil is therefore meaningless, and could lead to more confusion, turmoil, and price variability, in the global Oil markets, which were already set ablaze by President Biden.
EU could ask Russia for steep discounts, with a reasonable price cap hovering around the average price, to protect its economy. This could become possible, if EU takes an independent neutral stand in the Ukraine War.
The EU leadership could have noted the following dynamics.
- EU is funding the Ukraine war on one side, and seeking discounts for Oil from Russia, on the other side.
- The lopsided democracy and freedom advocated by President Biden, may not solve the problems of the World.
- The new Congress due in a month’s time in US, could bring a new vision, and a possible solution or end to the Ukraine War.
Remarks:
The author believes that it is worth waiting for the views and opinions of the new Congress of USA, in 2023.