U.S. officials have been forced to scale back a plan to impose a cap on Russian oil prices, following skepticism by investors and growing risk in financial markets brought on by crude volatility and central bank efforts to tame inflation, Bloomberg reported.
Instead of strangling the Kremlin’s oil revenues by imposing a strict lid on prices that would have been observed by a broad “buyer’s cartel” of nations, the US and European Union are likely to settle for a more loosely policed cap at a higher price than once envisioned, with just Group of Seven nations and Australia committed to abide by it, according to people familiar with the matter.
South Korea has also privately told G-7 nations it plans to comply, the people said. G-7 officials are seeking to bring New Zealand and Norway on board as well. But it’s clear that India and China - Russia’s most important trade partners - will not participate, the people said.
The price cap, in its final form, is expected to be announced before Dec. 5., when EU sanctions are set to go into effect on services such as insurance, brokerage and financial assistance involved in transporting Russian oil to international customers.
No decision is expected before the US elections. The EU aims to establish a price cap around Nov. 25, about 10 days before the bloc’s new sanctions kick in on services for Russian oil shipments.
