EU restrictions on the conditions for introducing a price ceiling for Russian oil as part of the latest sanctions package could lead to serious imbalances in the global oil market and put many tanker shipping companies in front of a difficult choice: whose oil to transport. Bloomberg writes about this with reference to market participants who have begun to prepare for the entry into force of new restrictions.
The agency notes that the European version of the sanctions contains a hidden threat for all companies that agree to transport Russian oil, ignoring the established price ceiling. The publication, citing EU documents and a report by the research company Rapidan Energy Group, claims that such companies face an indefinite ban on the use of European services: from the repair and maintenance of ships, to financial support for transactions and insurance.
“If a vessel flying the flag of a third country was transporting Russian crude oil or oil products purchased at a price higher than the marginal price, it is prohibited to provide it with technical assistance, intermediary services, financing, including insurance,” one of the relevant paragraphs says.
There were no such conditions in the option considered by the G7 countries, but the consequences for the market could be much more serious, up to a shortage in the oil market and supply disruptions. The idea proposed by Washington did not allow sanctions for the supply of Russian oil, even at a price above the ceiling, as the United States fears a shortage of oil in the market. The publication also recalls that the only G7 country that has not yet reacted to the price ceiling is the United Kingdom.
European sanctions will force the market to decide whether carriers are ready to comply with the price cap or whether they will focus only on working with Russia. The publication notes that it remains unclear whether this item was agreed with other members of the G7, including Washington, because in the current version it contradicts the idea that the United States promoted.
“Ships from third countries found to have violated the price ceiling will never again be able to use EU services such as insurance and finance. Since many shipowners around the world do not want to permanently lose access to European services, we expect them to avoid non-compliant cargo,” Rapidan Energy Group said in a report.
The high dependence of the shipping market on the European financial and insurance markets, according to Rapidan Energy Group, is likely to lead to a shortage of oil in the market. The company proceeds from the fact that Russian President Vladimir Putin has repeatedly said that he will not supply oil products to those countries that will support the oil price ceiling, therefore the company proceeds from the fact that Russia will reduce the sale of its oil on world markets, as well as reduce its own production . At the moment, there is no final benchmark for the oil price ceiling, US Treasury Secretary Janet Yellen said earlier that Washington is starting from a price of $60 per barrel.