Oil crisis averted as Russian crude gets capped at $60 per barrel
A few months ago, it was a glimmer in the eyes of some U.S. economic diplomacy wonks. Now, a price cap on Russian oil — imposed by U.S. and European allies to try to throttle revenues to Russia — is a reality.The cap, agreed at $60 per barrel on Friday, is meant to be enough to give Russia incentive to keep pumping oil, contributing to global supply, but prevent windfall profits amid its war in Ukraine.
The policy allows those importing Russian oil to take advantage of Western shipping, financing and insurance, only if they paythe debate is over whether the price is too high or too low. Ukraine and some of its closest allies like Poland wanted the number set lower to punish Russian President Vladimir Putin more. Shipping nations like Greece wanted it higher.
The conventional wisdom was that, given Europe's commitment to applying maximum pressure on Putin, the result would be sharply fewer global oil supplies, resulting in price spikes and risking economic crisis. In an April note, JPMorgan analysts estimated oil would reach $185 a barrel in the event of a full embargo of Russian oil, as Europe had threatened. In March, Goldman Sachs analysts were forecasting $135 per barrel of oil for year-end.By the numbers:
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