The White House does not believe that Russia will go for a sharp reduction in oil supplies in the event of the introduction of an oil price ceiling mechanism. The Joe Biden administration is confident that Russian President Vladimir Putin is simply bluffing with his threats to stop supplies, since under the conditions of sanctions, the Russian authorities will simply have nothing to finance government spending, including the war with Ukraine. This is reported by The Wall Street Journal, citing sources close to the White House.
Nevertheless, White House officials admit that such a risk is still possible, and if it is realized, then world oil prices can really reach $150 per barrel, which will have a negative impact on the United States itself. Moreover, the rise in the cost of energy resources can not only increase problems in Europe to a critical level, but also drive a wedge into relations between the US and the EU, which until now have been unanimous about the Ukrainian events, the newspaper notes.
In order to mitigate the risks for Europe, the US is actively considering the possibility of increasing the supply of energy resources to the EU: first of all, we are talking about the supply of liquefied natural gas (LNG). Gas supplies from Russia accounted for about 40% of Europe's needs, now the United States is trying to replace these volumes – about 70% of all American LNG is now sent to the EU. Moreover, the United States has already exceeded the target for gas supplies to Europe by 15 billion cubic meters of gas: since March, they have supplied more than 30 billion cubic meters of gas, which is almost twice as much as in the same period last year.
A “positive” factor in reducing the pressure of the energy crisis could be a recession in the European economy, the publication's experts say: a slowdown in Europe's GDP will reduce energy demand and thus reduce pressure on prices.
“If Europe enters a recession, demand for a wide range of products will obviously decrease. We're in such a twisted situation that it could actually be positive," said Dean Baker, an economist and co-founder of the Center for Economic and Policy Research.
At the same time, the stoppage of gas supplies to the EU from Russia will not hit the US at all, economists close to the White House say, on the contrary, it may have a positive effect on the gas industry, which will only benefit from increased demand. Risk officials note that trade with the EU will affect only 1% of US GDP, so the effect will be minimal. However, a halt in oil supplies from Russia could hit the US significantly – creating a new round of inflation and bringing gasoline prices in the US to a new record "literally overnight."
Nevertheless, US officials do not believe that Russia will decide to stop oil supplies. They are convinced that such a drastic step will simply destroy the country's oil industry, which will have to stop production at some projects, freeze wells and face an excess of energy resources in the domestic market. After such a decision, the Russian authorities will simply not be able to promptly increase production, the American authorities are sure.
“Russia can flare up and say it won’t sell below the set price, but the economic side of holding on to oil just doesn’t make sense,” said U.S. Treasury Deputy Secretary Wally Adeyemo, who is responsible for coordinating the introduction of a price cap mechanism for Russian oil around the world. .
Russian President Vladimir Putin earlier threatened during the Eastern Economic Forum (EEF) that Russia would stop supplying oil to countries that would join the "Russian oil price ceiling". The head of state is convinced that the mechanism proposed by the United States and the G7 countries creates risks for global energy security and will lead to nothing but a new price hike.