Time has come to squeeze the tyrant's throat with minimum oil prices and maximum restrictions on its sale
The President of Ukraine Volodymyr Zelenskyy in his speech at the founding summit of the Grain from Ukraine initiative spoke about the need to limit the price of Russian oil at a level of $30–40 per barrel. Such a price cap is absolutely real and, most importantly, necessary for the entire civilised world, because low oil prices have always been a driver of economic growth.
Growing economy
For example, during the oil crisis of 1973, when quotations rose from $15 to $70 per barrel, the dynamics of world exports sharply decreased and became negative, the global economy stagnated, while terror and enslavement were financed.
Later, from 1980s till the beginning of 2000s, when the price of oil fluctuated between $20 and $34 per barrel, the dynamics of world exports were positive and grew by 6% every year. It is important to note here that the low price of oil combined with the regulated economy and the Soviet invasion of Afghanistan played a key role in the collapse of the Empire of Evil.
Back into the present. Last week, Russian Urals oil was sold through export terminals at a price of $52 per barrel. This means that any talk or negotiation of the price caps of $65 or $70 in G7 may only provoke an increase in the selling price of Russian oil. Therefore, it is necessary to adhere to a common position and deprive the aggressor of the room for manoeuvre, in particular, in the media.
For example, allegations that Russia is developing a new methodology to control oil sales (including a ban on sales to states that have introduced the price cap) are an element of an informational and psychological operation and pressure on the falling global market. Oil prices fell record-low since December last year, as unrest in China dampened investor activity and pushed traders to negative expectations of demand, expecting even tougher travel restrictions.
The decline of the oil market in the PRC is indicated, in particular, by road traffic data: during peak hours in major Chinese cities, it decreased by an average of 45%, compared to the same date last year. Therefore, we can talk about a decrease in daily demand for oil by approximately 1 million barrels, which is 50% of the current Russian supply to the EU market.
Hence, no turn of the aggressor from the west to the east in terms of hydrocarbons supply will preserve the pre-war sales, which means that the time has come to squeeze the tyrant's throat with minimum prices and maximum restrictions on sales.
The good scenario
I see the following as a realistic scenario for the development of the situation for the benefit of Ukraine and the entire civilised world.
First, introduction of a price cap on the Russian oil, not more than $35 per barrel.
Second, a pledge of OPEC+ to increase oil production, at least by 1 million barrels.
Third, a total ban on the passage of Russian tankers through the Bosphorus and Dardanelles, in particular, prohibition of cargo insurance by Turkish companies.
In general, it is important to keep futures prices in the global oil market in a state of contango (when the supply exceeds the demand by a small margin of 5%) in the coming year. Most likely, this is how the situation will develop. At least two factors indicate this:
- A growing probability of resuming oil exports from Venezuela.
- A significant increase in oil and petroleum products storage capacities in the USA, planned for 2023.
By the way, the aggressor's lack of sufficient oil storage capacities is its weak point, leading to conservation of oil wells, because its oil refining industry also has certain limits and a backlog of orders.
No way to circumvent sanctions
Any sanctions must have a protective mechanism that will make it impossible to circumvent them. Unfortunately, this safeguard is not in place even now. At least the statistics for the first half of November says so: Russia increased oil shipments by sea by 4%, compared to the first half of October.
The conclusion is that many do not hear Ukraine and, perhaps, their own conscience, and continue to finance unprovoked aggression and target-minded killings of innocent civilians.
I hope that our pain will still be heard, because the whole civilised world is at stake: aggression and terror must fade into oblivion.
Source:
