The United States has thought about easing the terms of the marginal oil price mechanism due to fears of a sharp rise in prices on world markets. This was reported by Bloomberg, citing sources familiar with the discussion of the initiative aimed at reducing Russia's oil revenues.
If the White House used to consider price ceilings at the lower limit of oil profitability for Russia (the range of $40-60 per barrel), now the American establishment admits that this ceiling will be higher. The main reason is concerns about world markets, which, due to the ceiling, may face a shortage of oil, which will lead to a new jump in prices; as well as the position of partners who expressed their readiness to join the restrictive measures. For the US, rising oil prices are fraught with new public discontent within the country: the high price of energy accelerates inflation, and the topic of gasoline prices has become one of the most important on the eve of the midterm elections to Congress, which will be held in early November.
Doubts about the prospects of the mechanism are also associated with a small number of countries ready to join the restrictions. To date, the G7 countries, the European Union and Australia have expressed their commitment to sanctions. Representatives of South Korea also announced their readiness to comply with the price ceiling, and active negotiations are underway with Norway and New Zealand in this direction. However, the key buyers of Russian oil – India, China and Turkey – will definitely not join the restrictive mechanism.
The combination of these factors is forcing Washington to raise the price limit for Russian oil, although European allies believe that raising the limit will not lead to a significant decrease in Moscow's oil revenues. Officially, US representatives do not comment on this situation, noting only that negotiations with partners are ongoing.
“The White House is committed to an effective and strong cap on Russian oil prices in coordination with the G7 and other partners. This is the most efficient way to bring oil to the market at lower prices, and it will hit Putin's income to finance his war hard,” said Adrienne Watson, spokeswoman for the White House National Security Council.
According to Bloomberg estimates, in September, oil revenues brought the Russian budget $15 billion. According to Argus Media, the average price of Russian Urals oil in the past three years was $63 per barrel, over five years – $64 per barrel, during the last week – $74 .
The publication also notes that the issue of the ceiling on Russian oil prices increases the confrontation between the EU and the US, as European politicians are dissatisfied with their American counterparts due to the latter's unwillingness to bear economic damage, despite lobbying for large-scale restrictions. American politicians are unhappy with the terms of the EU oil embargo, which creates additional risks for the oil market due to tough sanctions against those who continue to cooperate with Russia despite the established price ceiling.
EU sanctions prohibit any services from being provided to companies that have agreed to supply Russian oil outside the price ceiling. In case of violations, Europe is ready to impose secondary sanctions. The US believes that such an approach creates risks for the entire oil market, but the EU does not intend to retreat, insisting that without such conditions, the ceiling makes little sense. The final price range is expected to be announced at the end of November, before the EU oil embargo comes into effect on December 5.
Nevertheless, even potential restrictions on Russian oil are already bearing fruit. Moscow's revenues from the oil and gas sector have been falling for several months in a row, oil revenues in September updated the absolute minimum since the start of the war in Ukraine.