Price ceiling for Russian oil could lead to a sharp increase in its cost globally, says The Economist

Sputnik – While European Union (EU) sanctions on Russian oil are about to come into force next week, the measure could trigger price shocks in the global market, The Economist reported on Friday (2).

Also on Friday, the EU reached agreement on a price cap of $60 per barrel for Russian oil transported by sea.

According to the article, European insurers and shipping companies have long had “tight control” of energy markets.

95% of property and indemnity insurance for all tankers has been handled by UK and EU companies. This appeared to be a lever with which the West could control the sale of Russian oil globally.

However, if Russian oil does not reach the market, global oil prices could skyrocket, hurting Western consumers.

“For this reason, the US Treasury Department has developed a cunning plan to smooth things over by allowing European companies to continue to offer their services, as long as the oil in question is purchased at a reduced price established by the West”, he points out. the British newspaper.

It all depends on how Moscow responds, according to the media, which warns that the Kremlin could cut its oil exports, relying on a smaller group of non-Western oil tankers and insurers, and driving global prices higher.

The article notes that countries such as China, India and Indonesia want to avoid participating in Western sanctions and embargoes.

Finally, the newspaper points out that the “true balance of power” in oil markets will become clearer after December 5, with the possibility of a “violent increase in prices”.

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