The EU and the G7 reached an agreement on an oil price cap of $60 per barrel. This is higher than the market price currently, but they say it is meant to avoid “market shocks,” and they assert that it will limit future Russian export gains. It applies to seaborne Russian oil. On the eve of the agreement, European Commission President Ursula von der Leyen had claimed that other “partners” would be associated with the deal.
Among such “partners” are certainly not oil producers. OPEC will meet Dec. 4 to decide a cut in production as retaliation. China and India, for sure, won’t join the price cap. And so on.
A buyer imposing prices on a seller won’t work in a market with many buyers. But it is a recipe for self-inflicted destruction. The Russian government has already announced that they will sell their oil elsewhere. According to the City of London-based Financial Times, Russia is prepared for that, having bought a hundred tankers for the job.
