The expert called the US initiative on the ceiling of oil prices difficult to implement

ASTANA, 13 Oct – PRIME. The introduction of a price ceiling for oil from Russia, which is being discussed in the US Treasury, is difficult to implement in practice, although the idea itself has already found its application in the form of a discount on Russian grades of “black gold”, Olzhas Baidildinov, a Kazakhstani expert in the oil and gas industry, told RIA Novosti.

On Wednesday, US Treasury Secretary Janet Yellen proposed a price ceiling for Russian oil at about $60 a barrel. Russian President Vladimir Putin, commenting on the West’s idea to limit prices for Russian energy resources, stated that Russia would not supply anything abroad if this would be contrary to its own interests.

“This (the introduction of a price ceiling – ed.) has indeed been discussed for a long time. But, in fact, to one degree or another, it exists, but not in the form of a ceiling, but in the form of a discount on Russian oil – Urals oil and other brands which are supplied from Russia. In some periods, this discount to world prices reached 30-35 dollars per barrel, which, in principle, corresponds to a level of around 60 dollars,” he said. According to a RIA Novosti source, Urals was traded in Europe in September at a discount of $18 to $22.5 per barrel.

The interlocutor of the agency believes that now the initiators of the innovation have decided to consolidate this mechanism on the basis of some international legal norms. “But this is not very feasible … As we have seen, global traders, local traders can blend (mix – ed.) Russian oil, but according to the laws, if the oil contains, for example, 51% of some other oil and 49% – Russian , it is not considered Russian, it can be sold under other varieties, under a different origin,” the expert explained.

Therefore, according to him, “when discussing the price ceiling, a clause is made prohibiting the blending of Russian oil, although this is difficult to implement” in practice. “But again, international traders and structures here, I think, will deftly bypass all this. As we remember, Iranian oil is subject to sanctions, embargoes and so on, but this does not prevent Iranian oil from calmly entering the markets of Asia, China, India and so on,” he said.

“On the whole, this is not, let’s say, the right tool from the point of view of Western countries, because the world still needs Russian hydrocarbons,” Baydildinov said. “In any case, by limiting one product, it can flow to some other markets, for example, Asian ones, and it is unlikely that all the countries of the European Union will approve the introduction of this ceiling, because in this case Russia will reorient some deliveries to other countries,” the expert concluded.

Western countries continue to discuss various measures to limit Russia’s income from oil and gas exports. So far, this has not been done either by imposing an embargo on oil, including by the entire European Union on maritime transportation, or by voluntary refusals of foreign companies. The redirection of exports, alternative supply schemes and the “sanctions premium” in world oil prices allow Russia to secure budget revenues even with sales at a discount.