US Presidential Administration Joe Biden intensified negotiations with large oil importers to persuade them to participate in the initiative to introduce the ceiling of Russian oil prices, writes Financial Times.
The United States fears that without this restriction of the world market may face a dangerous jump in energy prices. According to sources of the publication among American officials, Washington is negotiating with China, India and a number of other countries that bought Russian oil with a discount to a market price after refusing its purchases by many European customers due to the situation around Ukraine.
As the publication notes, the United States and the UK intend to join the ban on the European Union for insurance and maintenance of tankers transporting Russian oil, which should fully enter into force in December. Such a step will limit the export of Russian oil if the country cannot find a sufficient number of tankers ready to supply without insurance, but the states warn that reducing exports from Russia without the introduction of the ceiling for the price of Russian oil provoke a shortage of raw materials in the world market and a jump in prices, which , in turn, leveles the potential losses of Russia from reducing oil supplies abroad.
The initiative promoted by the United States suggests that the ban on tanker insurance will not apply to a party of Russian oil sold at a price below a certain level.
“production in Russia will fall when the ban on insurance and maintenance of tankers will fully enter into force if we do not coordinate the introduction of price restrictions that will allow Russian export to continue. This is the only way to prevent a sharp increase in prices, – one of the sources of FT noted.
American officials who communicated with FT are afraid that the oil market underestimates the potential consequences of the ban on Russian oil insurance without the introduction of the ceiling of prices, they are sure that this measure will lead to a significant reduction in production in Russia. The United States believe that countries importing Russian oil at prices below market ones will be able to buy it even cheaper if the initiative to introduce the price ceiling becomes global, sources say.
According to sources, the ceiling of the sale of Russian oil is not yet agreed, and the mechanism under discussion may vary depending on fluctuations in the oil market.