THE oil prices they continue to decline due to fears about the squeeze of central banks, the weakness of the demand for crude oil, but also the new restrictions to curb Covid-19 in China (the city of Chengdu, which has about 21 million residents, is quarantined). European black gold lost 1.78% to 93 dollars a barrel, for the third day at a loss. US oil also dropped by 2.25% to 87 dollars a barrel.
From equities to oil, risk assets have been hit by expectations that global central banks will continue to raise rates and keep them at high levels for the foreseeable future. This adds to fears that oil demand is being undermined by weak global growth and closures in China. Despite the declines, oil prices remain high continuing to fluctuate between 90 and 100 dollars a barrel.
The G7 is ready to discuss the Russian oil price cap
Group of Seven finance ministers will hold talks this week to allow global purchases of Russian oil at a limited price, a move the US hopes will ease the pressures on the energy market and reduce total Russian crude oil revenues. US officials also specified that Treasury Secretary Janet Yellen and her counterparts will further discuss the measures to be applied at a meeting on Friday, September 2.
The United States wants to use the oil price cap to hit Putin
“This is the most effective way, we believe, for hit hard on Putin’s income “, White House Press Secretary Karine Jean Pierre explained on the morning of September 1. This strategy according to the White House will not only result in a drop in Moscow’s oil revenues, but also in a drop in global energy prices.
“We believe this is not just an idea worth exploring, but an idea worth implementing and we can’t wait to hear what finance ministers say at the end of the week,” commented John Kirby. spokesperson for the United States National Security Council. For his part, the United Kingdom he said he supports the plan, with Chancellor of the Exchequer Nadhim Zahawi saying it will be “most effective if supported by the broadest possible coalition.”.
What will be the price limit for oil?
The United States and its allies want to devise the best way to sanction Russia after its invasion of Ukraine disrupted global energy markets and rocketed crude oil prices. The G7, which also includes Germany, the United Kingdom, France, Italy, Japan and Canada, pledged earlier this year to curb dependence on Russian energy, even “by eliminating gradually or by banning the import of Russian oil “.CopyAMP code
While there is still no information on the price cap, some US officials have explained that allowing global purchases at or below a price cap it would cause other buyers to seek the same discount and would ultimately alleviate shortages in the market, lower global reference prices, and force Russia to make an additional discount for its exports, reducing Russia’s overall revenue eventually. (All rights reserved)