November 04, 2022 08:14 GMT
G7 nations and Australia have agreed to set a fixed price when they reach an agreement on a Russian oil price cap later this month rather than a floating one according to a Reuters exclusive.
- The price cap is scheduled to come into place Dec 5, the same day as the EU ban, in efforts to keep Russian volumes in the market and avoid another crude rally.
- “The Coalition has agreed the price cap will be a fixed price that will be reviewed regularly rather than a discount to an index," the source said, adding "This will increase market stability and simplify compliance to minimize the burden on market participants.”
- A number of sources said the actual price has not been agreed upon yet.
- The group wants to move away from pegging to benchmarks because they are worried that a floating price pegged below the Brent international benchmark might enable Russia to game the mechanism by reducing supply.
- Initial prices have been touted in the low to mid $60/bbl range.