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Oil price cap will backfire – economist – RT Business News


Countries that support the measure will struggle to replace lost Russian supplies, says Mamdouh Salameh

Western countries have failed in their attempts to stem soaring global oil prices with price caps on Russian crude exports, Mamdouh Salameh, a prominent oil economist and World Bank energy consultant, told the newspaper this week. Oil price.

According to Salameh, none of the major oil-producing countries would agree to sell their crude at a price far below the market average, which would effectively deprive the West of oil supplies.

“The Western price cap on Russian oil exports has already failed and will soon be relegated to the dustbin…Neither the OPEC+ countries nor Russia will agree to sell their oil at the price cap of $60 a barrel when the price in the market is above $85. … Sellers can easily find buyers for their oil but Western countries cannot, and without oil their economies will come to a standstill. They will be the ultimate losers.” he said.

According to the economist, instead of achieving the supposed goal of lowering world oil prices, the capping mechanism has stimulated their growth.

“The proof of this is that when the cap was launched on December 5, Brent was at $73 a barrel but since then it has risen to $85.43 today, up 17%,” he said. -he adds. he said.

Salameh also said the Russian economy is unlikely to be affected by the cap.

“Russia will not lose. Its main buyers like China, India, Asian countries…have already ignored the price cap and continue to buy Russian crude in increasing volumes…Even though Russia sells 6 million barrels of crude oil per day at the price current Brent price of $85.43, it gets more revenue than selling 7 million barrels a day at $73. Therefore, Russia’s budget will not lose a single penny. On the contrary… the Russian budget surplus could only increase,” he added. he said.

Price caps on Russian oil exports by sea were introduced by the EU, G7 countries and Australia on December 5. It prohibits Western companies from providing insurance and other services to ships carrying Russian oil unless the cargo is purchased at or below the set price.

In response to the move, Russian President Vladimir Putin this week issued a decree banning deliveries of Russian oil and petroleum products to countries that directly or indirectly mention price caps in contracts.

For more stories on economics and finance, visit RT’s business section


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