Tomorrow will be a day they will want to forget in Russia's oil industry.
The reason: the entry into force of both the oil price ceiling set by the G7 powers and Australia, and the European embargo on oil.
At the end of the week, the United States, Great Britain, Italy, Germany, France, Canada and Japan, in cooperation with the European Union and Australia, agreed that Russian oil, delivered by sea, could not be sold for more than 60 dollars per barrel. The goal: to cut Russia's income from the black gold and damage its ability to finance the war Between 70% and 85% of all the oil produced in Russia is exported by sea.
The G7 is convinced that all countries will have to align with the ceiling and pay Russia up to $60 per barrel, and this is because the powers involved in setting the ceiling are the world's main providers of transportation and insurance services.
Those who determined the ceiling expressed hope that the measure would also benefit the weaker countries, which suffered "disproportionately from the effects of Putin's war".
An oil tanker carrying Russian oil, photo: Reuters
In Ukraine, they demanded a much lower ceiling, of 30 dollars, in order to more quickly damage the revenues of the Putin regime.
Warsaw, Kyiv's close ally, also demanded to lower the ceiling to this level, but the powers decided on $60.
Every two months the ceiling will be tested to make sure it is 5% lower than the market price.
The choice of a ceiling of $60 is intended to keep Russian oil on the market, and to prevent a jump in prices due to the parallel measure, which goes into effect tomorrow: the embargo of the European Union and the United Kingdom on the import of Russian oil by sea.
"With this embargo, Russia loses buyers for 50% of the oil it exports," Mikhail Krutykhin, one of the top analysts of the oil and gas industry, told Israel Hayom, "the other 50% it supplies to China, India, Turkey and other countries that did not join the sanctions. But what What do we do with the 50% that remains without demand? India and Turkey will take a little, because they don't need all the surpluses. In other words, a significant part of Russian oil exports simply disappeared, and with it huge revenues. Russia will also have to reduce oil production by 50% by the end of the year." .
When the embargo on Russian oil products also goes into effect on March 5, Krutihin estimates that the Kremlin coffers will lose 30% of its income.
Won't the measures cause a shortage of oil in the world?
"Already now there is no shortage of oil on the global market. Currently there is even a surplus of 1.5 million barrels per day. If Russian oil is not in the picture, OPEC countries like Saudi Arabia will be able to increase production to restore the balance.
By and large, the departure of Russian oil will not be felt in the market."
"The ceiling is unacceptable"
And what is Russia doing to deal with the measures?
According to the Financial Times, since the beginning of the year Russia has built a "shadow fleet" of 103 obsolete tankers purchased by anonymous buyers.
However, it is doubtful that the fleet will solve Russian transportation needs.
At the end of the week, Moscow announced that they would not supply oil to countries that would comply with the ceiling, but in recent weeks, Russia has been selling the oil at high discounts anyway.
Now Russian oil buyers will have another means of pressure to get discounts.
And if Putin does not agree to market?
The Russian oil industry will simply crash, believes Krutihin.
"He has already eliminated gas exports, so there is no stopping him from doing the same to oil."
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