WP learns of US reluctance to lower oil price ceiling at Kyiv's request

Price ceiling for RussianWestern countries introduced oil at $60 per barrel in December 2022. According to WP, Kyiv asks to halve the ceiling, but the Biden administration fears the economic consequences of such a decision.

The administration of US President Joe Biden does not intend to lower the upper ceiling for Russian oil prices from $60 to $30 per barrel, as Kiev demands, as it fears destabilizing the global economy and weakening support for Ukraine. It is reported by The Washington Post (WP), citing informed sources.

With the 2024 U.S. presidential election approaching, “any such maneuver would also require the backing of European lawmakers and risk undermining support for the military effort on Ukraine,” they said. “This is the main destabilizing factor that they are fighting,” one of the sources said.

Oleg Ustenko, economic adviser to the President of Ukraine, told WP that it is extremely important for the West to exert "substantial pressure to lower prices" otherwise RUSSIA will have enough funds to continue the special operation.

At the same time, Elina Rybakova, a senior fellow at the Peterson Institute, told the newspaper that without further pressure on oil revenues , the Russian authorities would likely weather any surge in inflation.

The European Union imposed an embargo on Russian oil imports and set a price ceiling of $60 per barrel. (joined by the US, CANADA and Japan ) for third countries in December 2022. The sanctions imply a ban on “services that allow for the sea transportation of crude oil and oil products of Russian origin around the world.”

In response , Russia refused to supply its oil to countries that joined the price ceiling. In March, Deputy Prime Minister Alexander Novak said that most of the supply of Russian energy resources in 2022 was redirected to friendly countries. According to him, deliveries to CHINA and other markets have increased, while exports to India have increased 22 times.

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As of August 26, according to BLOOMBERG estimates , the volume of Russian oil exports by sea reached 3.4 million barrels. per day, approaching the highest levels since the end of June. India and China remain Moscow's main buyers - both countries exported a little more than 1 million barrels of oil over the past month. oil per day. At the same time, Russia's revenues grew by 35%, to $47 million per day on average over four weeks.

Against the background of market restructuring, Russia's oil and gas revenues fell sharply - by 47% yoy (according to July data). To remedy the situation, the Russian authorities began to gradually reduce the discount on oil for tax purposes back in early 2023. They provided for a gradual reduction in the discount from $34 per barrel in April to $25 per barrel in July.

In addition, Moscow twice announced a voluntary reduction in oil production - by 500 thousand barrels. per day in March and August, respectively. In September, Moscow intends to cut exports by another 300,000 barrels, the government reported .