Heating fuel prices fall like a stone – oil price cap and consequences

At the beginning of December, the EU and the G-7 agreed on a price ceiling for Russia of $60 per barrel crude oil. However, the medium-term impact is unclear to many analysts and economists, and other effects are likely to play a role. Oil Market (China) placed Currently, crude oil, diesel and Heating oil (see below), but drastically.

This is also a fact: The cap is designed to prevent companies from doing thisto provide Russian oil import transportation, insurance and related services. The only exception would be if this oil were to trade below the $60 price ceiling. This is not very likely at the moment.

Russia’s Urals crude was trading just under $62 a barrel on Tuesday, December 6 (see chart), representing a drop of around $7 from last week. It’s a similar sharp decline as the others oil pricelt WTI or Brent. Brent crude was at $81.4 a barrel on Tuesday afternoon, up $1.30 from Monday and $6.60 from a week ago.

A price ceiling should actually increase supply problems, which at the same time due to the EU embargo on Russian crude oil imports by sea (for EU countries).

The embargo is likely to limit supply in the market, as the EU will then have to source raw material from elsewhere,” Commerzbank analyst Carsten Fritsch told Reuters.

Russia has also said it will not sell its oil to anyone who agrees to the price ceiling.

Meanwhile, Reuters reports that Russia sold its crude at the Far Eastern port of Kozmin to Asian markets for around $79 a barrel, nearly a third higher than the price ceiling set by the G7 and the European Union.

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