American investor called the idea of ​​”ceiling” oil prices ineffective

MOSCOW, September 13 – PRIME. The United States and its allies can successfully conclude a formal agreement on the price limit for Russian oil, but such an agreement will be fruitless due to the impossibility of law enforcement of the deal in market realities, Sovereign Wealth Management CEO Gary Korolev told RIA Novosti.

The leaders of the G7 countries (Great Britain, Germany, Italy, Canada, the USA, France and Japan) at the summit on June 26-28 confirmed their intention to reduce dependence on energy from Russia and tentatively agreed to start limiting prices for Russian oil and gas. In September, they confirmed their intention to cap oil prices as part of an expansion of sanctions. It is planned that the price limit will be introduced on December 5 for oil and on February 5, 2023 for oil products. Russian representatives warned in response that the countries that would apply the limits would be left without oil exports. Later, Russian President Vladimir Putin said that Moscow would not supply anything abroad if it would be contrary to its own interests.

“The new agreement (on a ceiling on the price of oil from the Russian Federation) is likely to officially enter into force, but in fact will be ineffective due to many exceptions, gaps, lack of enforcement in market realities and the need for Western countries to support their economies,” he said.

According to the businessman, such an agreement will gradually lose its relevance. Korolev said the agreement was a “show of strength,” adding that India and China had refused to follow the sanctions strategy of the US and its allies.

“The Indian economy has benefited from European sanctions because the country has become the main supplier of Russian refined oil to Europe. India and China are making huge profits by refining this oil,” he said.

Korolev stressed that Western countries are already buying Russian oil, but from the gray market and with a significant overpayment.

In addition, the investor said that Western investors are looking with appetite at the possibility of investing in the Russian market, which has come under artificial pressure from the sanctions regime.

“Schiller’s cyclically adjusted price-to-earnings ratio – the classic method of comparing the value of an asset to its market price – was one of the best in the Russian market among all values ​​​​in the world even before the start of the CBO. Now every ruble received can be bought at a 40% discount even to those high values,” he stressed.

Korolev also assessed Europe’s investment prospects, pointing out that the EU market will continue to face restrictions on foreign investment until the region emerges from the energy crisis.

According to him, the European Union, against the backdrop of the absence of alternative energy suppliers, cannot exist without Russian “blue fuel”.

“It’s unbelievable that despite Europe’s huge energy problems, Germany is still planning to stop the operation of its nuclear power plants. Nuclear power is the only way to at least partially solve Europe’s current difficulties in refusing gas from Russia,” Korolev said.

The investor added that the aggravation of the energy crisis in Europe could provoke social and political instability in the region.

In addition, Korolev noted that the crisis also affected the American economy.

“Inflation is likely to drop significantly in the short term, but the days when prices were rising at 2% annually will most likely not return,” he said.

According to the investor, the US economy, despite the efforts of the Fed to reduce the current growth rate of consumer prices in the country, is moving towards slowing down its growth with a likely recession. At the same time, a high level of employment in the labor market is not an indicator of the current state of affairs.