RIYADH: Oil prices fell by more than $2 a barrel on Wednesday as the Group of Seven nations looked at a price cap on Russian oil above where the crude grade is currently trading.
Brent crude futures fell $2.61, or 2.95 percent, to $85.75 a barrel at 03.55 p.m Saudi time, while US West Texas Intermediate crude futures were down $2.15, or 2.66 percent, at $79.38 a barrel.
G7 nations are looking at a price cap on Russian seaborne oil in the range of $65-70/bbl, Reuters reported quoting a European official on Wednesday.
US says G7 should soon unveil price cap level on Russian oil
The Group of Seven nations should soon announce the price cap on Russian oil exports and the coalition will probably adjust the level a few times a year rather than monthly, Reuters reported quoting a senior US Treasury official.
The G7, including the US, along with the EU and Australia are slated to implement the price cap on sea-borne exports of Russian oil on Dec. 5, as part of sanctions intended to punish Moscow for its invasion of Ukraine.
The aim of the unprecedented price cap mechanism is to reduce Russia’s petroleum revenues funding its war machine while maintaining flows of its oil to global markets to prevent price spikes. A cap on exports of Russian oil products is slated to begin on Feb. 5.
The Treasury official told reporters that the EU is consulting with members on the price cap.
“Our hope is that they will finish that consultation relatively soon and put us in a position where our entire coalition can announce a price,” the official said.
A decision on the price cap level could come as soon as Wednesday or Thursday after a meeting of EU ambassadors, a source familiar with the discussion said.
The G7 price cap would allow companies to provide services including insurance, shipping and financing on Russian oil imports to coalition members, so long as the purchase of that petroleum is under the price cap.
The official said Washington does not expect Russia to retaliate by withholding oil exports, as Putin has warned would happen. Such a move could send global oil prices higher, but risks damaging Russian oil fields.
“We have no reason to expect that they would do that because, ultimately, it’s not in their interest,” the Treasury official said.
Oil theft cost Nigeria $2 billion: report
Nigeria lost more than $2 billion to oil theft during the first eight months of this year, an investigation by the country’s Senate found on Tuesday.
Large-scale theft from Nigeria’s pipelines has throttled exports, forced some companies to shut in production, crippled the country’s finances and knocked the country off its position as Africa’s top oil producer.
An ad hoc committee of the Senate, Nigeria’s upper house of parliament, undertook an investigation into the impact of the theft.
Its findings were presented to the Senate in a report that found only 66 percent of the country’s oil production could be “effectively guaranteed.”
The other 33 percent, it said, was affected by theft and lost production “due to the third party easy access on land terrain.”
“The country has lost over $2 Billion to oil theft between January and August 2022, which lost revenue ordinarily would have supported the country, fiscal deficits and budget implementation,” the report said.
State-owned oil company NNPC Ltd. has said production is starting to improve after Nigeria’s coordinated interventions, including contracts with companies owned by former militants, to crack down on theft.
(With input from Reuters)