Russian Oil Price Cap Still Lacks Clarity

US and Western officials are working on finalised plans to impose a price cap on Russian oil but details remain thin against fears of weak participation by emerging economies.

• The World Bank warned yesterday the plan needs active participation of emerging economies to be effective.
• There is no official news on where the price will be set but a Reuters source has said the cap will be determined in line with the historical average of $63-64 a barrel. US Treasury Secretary Janet Yellen had previously suggested around the $60 range. A senior Biden official has said reports of price ranges were wrong but added no further details.
• Plans on the price need to be agreed in the short term with the intention to launch the mechanism by December 5 when the European ban on Russian oil comes into place.
• The Biden administration has claimed that price cap momentum was emboldening Russia’s buyers to ask for bigger discounts.
• Russia has said they will not deal with countries who implement the cap - limiting the chance of countries like China, India or Turkey joining.
• The idea behind the cap is finding a balance between keeping Russian oil flows in the market while allowing them to still generate a profit but at a lower level.