Estonian Oil Association: USD 60 price cap on Russian oil doesn't serve intended purpose

  • 2022-12-05
  • BNS/TBT Staff

TALLINN – Mart Raamat, the CEO of the Estonian Oil Association, believes that the 60 US dollar price cap imposed by Western countries on Russian crude oil does not have a noticeable effect on the terrorist state's ability to finance its war machine and thus does not fulfill its purpose.

"The 60 dollar price cap that has prevailed should not significantly unsettle oil markets, as it is higher than what is currently being paid for the main Russian crude, Urals. At the same time, it will not have a very big impact on Russia's incomes either -- analysts have estimated that the state budget has reckoned with oil prices of 60-70 dollars per barrel. So, yes, probably, with such a price cap, Russian oil will be kept on the world market. Unfortunately, it will probably not have a significant negative impact on Putin's ability to finance his war machine," Raamat told BNS.

Raamat pointed out that Russia is one of the world's most significant oil exporters, and when setting a price cap, its effects must be carefully examined in order for it to fulfill its goals.

"Western countries are trying to hit two birds with one stone by imposing a price cap -- to limit the income received by Russia from oil exports and at the same time keep Russian oil on the world market at all costs. Of course, this is a delicate matter, because Russia has already threatened that it will stop selling oil to countries which join the price cap," the head of the Estonian Oil Association said.

He argued that there would probably be no crisis on the global oil market even if a much lower price cap were to be established for Russian crude, as Russia's threats to reduce oil exports should not be taken very seriously.

"It is estimated that Russian oil has a cost price of between 12.5 and 40 dollars per barrel, and in order to reduce Russia's revenues in real terms, the price cap would have to be set at a lower level. Russia would probably not realize its threats to significantly reduce oil exports even if the cap were in the region of 45-50 dollars per barrel," Raamat said.