The price of Russian oil ceiling requires global cooperation efforts, but many countries are benefiting thanks to cheap Russian oil prices may not be ready to participate.

The financial ministers of the G7 group on September 2 announced that they would urgently work to complete and implement the ceiling price measure with Russian oil, but did not specify the ceiling level.


Photo: Reuters.

The ceiling price mechanism is not a replacement of G7's previous sanctions on Russian oil, but will be made simultaneously.

A oil field near the city of Almetyevsk of the Russian Republic of Tatarstan.

Since May, US Finance Secretary Janet Yellen has stated the idea of pressing the price of Russian oil ceiling with European counterparts.

The European Union (EU) then agreed to gradually impose embargo on Russian oil until the end of 2022. The move to stop buying oil is an effort to cause loss of the Russian economy because of the military campaign.

US President Joe Biden referred to the proposal of pressing the price of Nga oil ceiling with G7 in late June and his partners agreed to consider this plan.

A similar mechanism launched by US President Bill Clinton and was applied by the United Nations in 1995 to allow Iraq to sell oil in exchange for food and medicine.

Under this mechanism, the oil buyer paid for the margin account at the French BNP Paribas Bank.

The United Nations then achieved a high unity on the front against the Hussein government, but the countries now divided in the Russian -Ukrainian conflict.

Experts assessing the price of Russian oil ceiling is really easier than doing.

In addition, the decision to apply the ceiling of Russian oil price also has the risk of unwanted consequences.

Meanwhile, some countries stand on the sidelines, especially China and India, have greatly benefited thanks to the import of Russian oil at a preferential price, while Moscow still earns a record profit thanks to the higher overall price.

The price of ceiling can even make Russia's cheap oil become more sought after, contrary to the original goal of G7 and the West.

When you apply a ceiling price with Russian oil, it is time for you to declare that it is legal and the purchase of Russian oil will not bring any consequences, Brenda Shaffer, a senior member at the global energy center of the Great Council

It would be insufficient if required by Russian crude oil -selling energy exchanges at the prescribed price, because the buyer and the seller could perform personal transactions through information security contracts.

This is why G7 leaders are focusing on comprehensive ban on all services that allow crude oil transport and Russian oil products around the globe, unless the oil is purchased or lower.

A senior EU official said that this measure would be aimed at finance, insurance and oil transportation.

Typically, the buyer does not spend all 100 million USD to buy.

The bank will not provide a notice if the ships are not insured.

If you come to London to buy insurance and they say: 'It's Russian crude oil, I can only insurance it is equal to the amount of x', the buyer will not be ready to pay higher than the price of each oil barrel, but they are

Simone Tagliapietra, senior expert from Bruegel consultancy in Brussels, warned of the possibility of underground transactions, where the insurance company provides contracts with the proposed ceiling price, but in fact, in fact,

Even when everything goes smoothly, there are still many issues related to the allocation of oil at the prescribed ceiling price.

Suppose the ceiling price is X and it is actually applied, so which buyer will have access to this cheap Russian crude oil and which buyer still has to pay at market prices?

There have been discussions about the use of such profits to establish aid fund for Ukraine, but a big obstacle to the success of the ceiling price plan is to persuade the Russian crude oil buyers.

Senior EU officials acknowledged that the plan to impose price of Russian oil ceiling can only be effective with certain conditions such as it must be applied comprehensively globally, with the market control ... and China

Parkar said India seemed to be ready to cooperate, but China has not yet shown that they are willing to participate in any agreement with the West.

That will lead to a three -sided market, according to Shaffer from the Atlantic Council.