Russia Considers Oil Price Floor Amid Price Cap

Russia is considering setting a price floor for its international oil sales as a response to the G7/EU oil price cap, according to officials familiar with the plan.

• The Russian government is considering to either impose a fixed price for crude oil, or stipulating maximum discounts to international benchmarks at which they can be sold.
• There is no information yet on the level.
• Russia aims to offer a transparent pricing mechanism to buyers of its crude, adhering to a market-based approach to counteract the cap.
• One approach envisions setting a maximum discount of Russian oil to global benchmarks, which the nation’s crude producers will not be allowed to exceed when offering their barrels to clients. The discount would be regularly revised based on global energy market movements.
• The other options would be to set a fixed price, also regularly revised based on markets.
• The Kremlin is also preparing a presidential decree that will ban Russian companies and any traders buying the nation’s oil from selling it to anyone that participates in the price cap, to be introduced by the end of the year.