The G-7′s Pursuit of A Russian Oil Price Ceiling
The world’s seven major industrialized economies have proposed a price restriction on Russian oil in order to further constrain the Kremlin’s capacity to fund its offensive in Ukraine and to safeguard consumers from rising energy prices.
The G-7′s pursuit of a price ceiling on Russian oil, on the other hand, is fraught with difficulties, with energy experts sceptical of the proposal′s credibility. The Kremlin, for its part, has cautioned that any attempt to put a price restriction on Russian oil will cause more harm than good. The United States appears to be the most vocal proponent of a Russian oil price ceiling.
Back in May, US Treasury Secretary Janet Yellen described the proposal to her European counterparts. She said it would act as a levy or quota on Russian oil and help Europe in the interim until they impose a full embargo.
After several weeks of difficult negotiations, the EU agreed in late May to impose a phased embargo on Russian oil until the end of 2022. The EU used to get roughly 25% of its oil imports from Russia. It was one of the Kremlin’s most important buyers. Stopping these oil purchases is an attempt to harm Russia’s economy following the unjustified invasion of Ukraine, but it is difficult to do so quickly considering how dependent several EU countries are on Russian fossil fuels.
Joe Biden Proposes an Oil Price Cap
Over the weekend of June 25 and 26, US President Joe Biden proposed an oil price cap to the rest of the G-7 leaders. His counterparts agreed to look into how to implement it. The G-7 consists of the United States, Canada, France, Germany, Italy, the United Kingdom, and Japan. Energy specialists have questioned how the G-7 can put a price restriction on Russian oil. They said that if significant users are not part of it, the idea could backfire, and time may be running short to make it effective. According to Atkinson, China and India have “benefited greatly” from inexpensive Russian crude.
Pressures on Oil Supply
Oil prices rose ahead of trading this week, with both main benchmarks rising by 2% or more on Friday.
This halted a sharp decline that saw benchmarks end the month lower for the first time since November, despite increasingly pessimistic projections about global economic growth and potential recessions.
Despite this, Brent crude increased 2.38 percent to $111.60 per barrel on Friday. Meanwhile, WTI crude increased 2.52 percent to $108.40 per barrel. The comeback came from new rumours of tighter markets. They have maintained prices historically elevated above the $100 mark since Russia’s invasion of Ukraine in February, after trading in the double digits for eight years.
OPEC’s decision last week not to consider further increasing production demands for September was one of the latest tight market tailwinds.
OPEC and its partners (OPEC+) agreed in early June to increase output by 648,000 barrels per day each month in July and August, compared to a previous agreement to add 432,000 barrels per day over three months.
Meanwhile, a planned walkout by Norwegian oil and gas employees on July 5 could reduce the country’s overall petroleum output by 8%, or 320,000 barrels of oil equivalent per day. However, if they reach a last-minute deal on salary demands this will not be the case.
Members of the Lederne labour union represent around 15% of the country’s offshore industry workforce. They are demanding wage increases to compensate for growing inflation.
They intend to strike three offshore fields on Tuesday. Moreover, they will add three more the next day if they don’t reach a solution. The country is a major oil and gas supplier, especially for addressing Europe’s energy needs.
‘Stop Oil’ protesters invade British GP track after crash
After a spectacular opening lap crash at the British Grand Prix on Sunday brought out a red flag, a group of ‘Just Stop Oil‘ demonstrators invaded the Silverstone course.
British police had previously stated that they had credible information about a plan to interrupt the event. The audience booed as cars slowly made their way to the pit lane before marshals. Police struggled with the demonstrators and hauled them away. According to the governing FIA, emergency services were quickly on the scene to retrieve Zhou. Their car skidded upside-down along the track before tumbling over the fences. The youngster stayed conscious and was transferred to the hospital centre, along with Williams’ Alexander Albon, for additional evaluation.
142,000 spectators descend on the circuit, which is 90 minutes west of London. The event is one of the sporting highlights of the British summer. Historically it has been a magnet for demonstrators. Two years ago during the British Grand Prix protesters hoisted a banner for the climate action group Extinction Rebellion. Hence, four people were arrested. Due to the COVID-19 pandemic, the event was closed to spectators at the time.
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