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Peter Davis

An writer at FOMOdrive

  • Oct 03, 2023
  • 2 min read

Bloomberg called for the abolition of the price ceiling on Russian oil

Bloomberg has reported that it is now time to remove the limit on the cost of Russian oil.

Russia's income is not decreased by the price ceiling, however, the danger of an environmental catastrophe is heightened.

Most of the Russian oil is currently being transported via antiquated vessels that lack insurance coverage.

On December 5 of last year, the G7 countries imposed a price ceiling of $60 per barrel on Russian oil. This was followed by similar restrictions on petroleum products in February, all in an effort to limit Russia's income without creating a shortage in the market.

At first, the sanctions had an effect, however, in the past few months, the cost of Russian oil has increased significantly due to a surge in oil prices.

Bloomberg reports that the discount of Urals oil prices to the cost of Brent has decreased by a factor of 4 since the start of the year, and is now around $10 per barrel.

At the start of the year, there was a shortage of ships to transport Russian oil, resulting in the biggest discounts.

Many ships that would only be suitable for scrap metal were utilized in the future to transport Russian oil.

Simultaneously, they employ the technique of deactivating the transponders that broadcast their whereabouts, transferring oil from one out-of-date ship to another directly in the ocean.

The UN has expressed worries about the potential for a major oil spill due to the presence of these aged, corroded tankers.

Bloomberg has reported that it is time to remove the price caps on Russian oil, as they do not negatively affect Russia's revenue, but rather increase the potential for environmental damage.

The removal of the price ceiling may not alter the quantity of Russian oil available on the market, however, it could enhance the quality of vessels used for transporting the oil. This would decrease the chances of an environmental catastrophe resulting from the utilization of aged tankers.

Russia will have wasted billions of dollars on the purchase of outdated ships, which will be of no use.

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