Brent crude costs rise after EU, G7 international locations attempt to cap Russian oil

Days after the European Union and G7 international locations determined to cap Russian oil exports at $60 per barrel, the worth of Brent crude shot up by nearly 2% to $87.25 per barrel on Monday (December 5), reported BBC.

The growth comes at a time when 23 Organization of the Petroleum Exporting Countries (OPEC) have agreed to chop down on the sale of crude oil within the world market.

With a scarcity in oil provide, coupled with the arm-twisting of Russia by the European Union and G7 international locations, it was anticipated that costs of crude oil would enhance. To add to the woes, demand for oil has elevated in a number of Chinese cities with the easing of the zero Covid-19 coverage.

The concept behind caping Russian oil exports at $60 per barrel was to forestall Russia from ‘profiting’ from the continuing conflict in opposition to Ukraine.

A value cap, set by European Union and G7 international locations, implies that oil offered on the agreed value might be shipped utilizing the tankers of the mentioned international locations, credit score establishments and insurance coverage firms.

It should be talked about that Russia is the 2nd high producer of crude oil after Saudi Arabia. While reacting to the worth cap on its oil exports, Kremlin spokesperson Dmitry Peskov mentioned that Russia wouldn’t settle for the worth cap and shortly resolve its future plan of action. 

“We are assessing the situation. We will not accept this price ceiling and once the assessment is over, we will inform you how the work will be organised,” Peskov had mentioned.

Russia’s everlasting consultant to worldwide organisations in Vienna, Mikhail Ulyanov, warned that the EU would find yourself ruing their resolution to impose the worth cap.

Senior vice-president at Rystad Energy, Jorge Leon, advised the BBC, “So probably what’s going to happen is that we will see some disruptions in the coming months and therefore probably oil prices are going to start increasing again in the coming weeks.”