⛔️⛽️ G7 countries are working hard to coordinate a sanctions regime to cap prices on Russian oil and oil products.

The United States is already drafting a mechanism for applying these sanctions, which its allies and partners will use as a guideline. The new sanctions in the form of legal arrangements are expected to be formalised very soon.

❓How will this mechanism work, and what consequences can this lead to?

📝 Writes Valdai Club Programme Director Ivan Timofeev.

#EconomicStatecraft #oil #sanctions

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📆 ANNOUNCEMENT: On November 30 at 13:00 Moscow time (GMT+3), the Valdai Club will host an expert discussion, titled “Who Really Stumbles Over the ‘Price Threshold’ for Russian Oil?”

Unilateral restrictive measures being rolled out by the US, the EU and a number of other initiators have led to the excessive politicisation of Russia’s participation in the global oil market. Bans on oil supplies to the United States are already in force, and they will come into force in the EU on December 5, 2022. In addition, the G7 countries are working to introduce a “price cap” mechanism for Russian oil.

It involves a ban on the transportation of oil from Russia by sea and the provision of related services if the price of transported oil is above a certain threshold. It is assumed that this threshold will be lower than the world oil price, which will force Russia to sell oil cheaper. However, until now, the EU countries have not been able to agree on a single “threshold” level because of the position of Poland and the Baltic countries. Against this background, Russia is actively looking for new markets and ways to supply oil to buyers that would be protected from the impact of Western sanctions.

❓To what extent will Russia be able to reorient its supplies to Asian markets?
❓Will Russia be able to maintain its volume of oil exports or increase them in the event of an increase in world demand?
❓How will the sanctions affect world oil prices?
❓Will the “price threshold” limit the Russian supplies?

These and other questions will be discussed by the participants of the discussion.

🎙 Speakers:

🇮🇷 Bijan Khajehpour, Managing partner at Eurasian Nexus Partners (Iran)

🇷🇺 Marsel Salikhov, President of the Institute of Energy and Finance

🇷🇺 Konstantin Simonov, Director General of the National Energy Security Fund, Professor, Financial University

Moderator:

🚩 Ivan Timofeev, Programme director of the Valdai Discussion Club

https://valdaiclub.com/events/announcements/valdai-club-to-discuss-the-price-cap-on-russian-oil/

ℹ️ Information for the media: In order to get accredited for the event, please fill out the form on our website or call +79269307763.

A link to the live broadcast of the discussion will be posted on all online platforms of the Valdai Club: on the website, Twitter, VKontakte, Telegram and Zen.

#EconomicStatecraft #sanctions #oil

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🏷🚫 The price threshold for oil is a relatively new and non-standard variety of economic sanctions.

Even before the start of the special military operation, a number of large Russian oil companies were subject to sectoral restrictions in the form of a ban on long-term lending and a ban on deliveries in the interests of individual projects. It turned out to be more difficult to impose blocking sanctions. A number of top managers and major shareholders of Russian oil assets were included in the lists of blocked persons. However, the West did not dare to block the companies themselves; Russia is too large a supplier of oil to the world market. Blocking the financial transactions of Russian suppliers would lead to a panic in the market and an astronomical rise in prices. Collateral damage is the only thing stopping the West from blocking Russian oil companies.

A price cap was proposed as a softer measure. The US and its partners are betting on the fact that Western companies control significant volumes of transportation and insurance. They are also betting on the dominance of the US dollar in global financial markets. Russian producers are being driven towards a situation in which they will either have to sell oil within the price threshold, or it will simply not be delivered. In addition, such cargo will not be insured, and financial transactions involving banks from the “threshold coalition” will become impossible. Moscow has already threatened to stop supplies to those countries that go ahead and implement the decisions of the "coalition". But the “coalition” itself has largely given up on Russian oil anyway.

On December 5, oil price restrictions should come into force, and in February, they are expected to be applied to oil products. The initiators of the sanctions expect attempts to circumvent new sanctions and are trying to cement possible loopholes in advance. What kind of workarounds are expected among the Western countries, and what are the chances they’ll be able to impose a price cap on other countries? Writes Ivan Timofeev, Programme Director of the Valdai Discussion Club.

https://valdaiclub.com/a/highlights/oil-price-threshold-action-and-reaction/

⏰ We will discuss the ‘price threshold’ for Russian oil today at 13:00 Moscow time. Watch the live broadcast of the discussion.

#EconomicStatecraft #oil #sanctions

@valdaiclub

UPD: The livestream is over. The video of the discussion is available via the same link. Stay tuned!

🎥 LIVE: at 13:00 Moscow time (GMT+3), the Valdai Club will host an expert discussion, titled “Who Really Stumbles Over the ‘Price Threshold’ for Russian Oil?”

https://vk.com/video-214192832_456239058

#EconomicStatecraft #oil #sanctions

@valdai_club

❓🛢 Price Threshold for Russian Oil: Anti- Market Barbarism and Chaos Risks

On November 30, the Valdai Club hosted an expert discussion titled “Who Really Stumbles Over the ‘Price Threshold’ for Russian Oil?”

💬 Discussion moderator Ivan Timofeev, Programme director of the Valdai Discussion Club, called the oil price cap a new instrument of sanctions policy, at least in relation to Russia. The price threshold, in his opinion, has become a kind of intermediate option, allowing the West to stop short of demanding a moratorium on Russian oil trade, which would cause shocks in the markets. The question is how effective this measure will be and whether the West is able to drive Russian supplies into an artificial political corridor.

💬 Konstantin Simonov, Director General of the National Energy Security Fund, and a Professor at the Financial University, considers the price cap not a sanctions mechanism, but a mechanism for fighting suppliers. “People who have been saying for decades that they are for markets are engaged in absolutely anti-market barbarism,” he said, adding that if this mechanism works, it can even be used without political pretexts. At the same time, the market itself does not believe in the immediate threat of destabilisation, and prices are not rising yet. Russia, in turn, believes in market values and expects to rely upon demand in other regions.

💬 Marcel Salikhov, President of the Institute of Energy and Finance, pointed to the failure in oil production in the spring, associated with the departure of large traders who refused to work with Russian oil. However, by the summer, production had recovered, and Western countries, realising that the embargo was not working, turned to the idea of a price cap. In the end, they decided to combine an embargo and a price cap, and countries that impose a price cap have already imposed an embargo, which complicates the implementation of the new mechanism. Salikhov emphasised that high threshold values are being discussed, so its short-term effect will be insignificant. However, not only this effect is important, but also the emergence of some kind of infrastructure, which may have a long-term negative impact on the Russian oil industry going forward.

💬 Bijan Khajehpour, Managing Partner at Eurasian Nexus Partners, a consulting company, spoke about Iran's experience in countering sanctions pressure. He noted that the sanctions have an effect, but they do not achieve their goals despite hitting the economy. In some cases, they pave the way for such negative phenomena as money laundering, which also affect the initiators of sanctions. The analyst believes that the price cap for Russian oil will face the same fate as other sanctions measures, and Russia will be able to find new markets, as more countries will ignore the sanctions, which are perceived as a manifestation of Western hypocrisy.

https://valdaiclub.com/events/posts/articles/price-threshold-for-russian-oil-anti-market-barbarism-and-chaos-risks/

#EconomicStatecraft #oil #sanctions

@valdai_club

⛽️ OPEC+ is an expanded format of OPEC, formed in November 2016, which includes 10 more countries led by Russia (14% of world oil production) to regulate the oil market. OPEC+ controls 55% of the world's oil supplies and 90% of proven reserves.

OPEC+ countries in October 2022 reduced the quota for oil production by 2 million barrels per day and extended the deal until 2023.

Especially for the Valdai Club 12th Middle East Conference, we prepared an infographic on OPEC+. The high-res infographic is available on the website.

#mideastvaldai #valdai_infographics #OPEC #oil

@valdai_club

💡🌏 Today, the global energy order that emerged after the energy crisis of the 1970s is undergoing structural changes.

It happens under the influence of energy transition policies, geopolitical conflicts, and the transformation of traditional economic relations; access to energy resources can be determined within the narrow framework of strategic and even military alliances.

These times of great upheaval present new challenges and opportunities for the Energy Club of the Shanghai Cooperation Organisation. The key challenge for SCO member states and associate partners is how to turn the organisation’s Energy Club into an effective institutional body for harmonising their energy strategies and strengthening energy security, given the rapidly changing global energy architecture.

In the context of the transformation of the global energy order, the issue of increasing the role of the SCO Energy Club in managing energy processes at various levels is more acute than ever, writes Shamil Yenikeyeff, Professor, School of International Affairs, Faculty of World Economy and International Affairs, Higher School of Economics.

https://valdaiclub.com/a/highlights/the-sco-energy-club-in-the-changing-global-energy-/

#Asia_and_Eurasia #energy #gas #oil #ШОС

@valdai_club