Vinfast RoRo Departs Vietnam With eSUVs To Compete With Tesla
By Nguyen Kieu Giang (Bloomberg) VinFast, an electric carmaker backed by Vietnam’s richest man, is shipping its first SUVs to the US, a milestone for parent Vingroup JSC that set out...
By Andrea Shalal, Noah Browning and Timothy Gardner
WASHINGTON/LONDON, Nov 4 (Reuters) – The Group of Seven rich nations and Australia have agreed to set a fixed price when they finalize a price cap on Russian oil later this month, rather than adopting a floating rate, sources said on Thursday.
U.S. officials and G7 countries have been in intense negotiations in recent weeks over the unprecedented plan to put a price cap on sea-borne oil shipments, which is scheduled to take effect on Dec. 5 – to ensure EU and U.S. sanctions aimed at limiting Moscow’s ability to fund its invasion of Ukraine do not throttle the global oil market.
“The Coalition has agreed the price cap will be a fixed price that will be reviewed regularly rather than a discount to an index,” said a coalition source, who was not authorized to speak publicly. “This will increase market stability and simplify compliance to minimize the burden on market participants.”
The initial price itself has not been set, but should be in coming weeks, multiple sources said. Coalition partners agreed to regularly review the fixed price and revise it as needed, the source said, without disclosing further details.
Pegging the price as a discount to some index would have resulted in too much volatility and potential price swings, the source added.
The coalition worried that a floating price pegged below the Brent international benchmark might enable Russian President Vladimir Putin to game the mechanism by reducing supply, a second source with knowledge of the discussions said.
Putin could benefit from a floating price system because the price for his country’soil would also rise if Brent spiked due to a cut in oil from Russia, one of the world’s largest petroleum producers. The downside of the agreed fixed price system is that it will require more meetings of the coalition and bureaucracy to review it regularly, the source said.
U.S. Treasury Secretary Janet Yellen and other G7 officials argue the price cap, set to begin Dec. 5 on crude and Feb. 5 on oil products, will squeeze funding to Russia without cutting supply to consumers. Russia has said it will refuse to shipoil to countries that set price caps.
Shipping services are eager to see more details about the G7 plan which is due to take effect in a month.
A steady price cap could enable insurers to more confidently roll over contracts and initiate new ones without fear that the price could be adjusted by the countries buying Russian oil, which could have potentially exposed insurers to sanctions.
No immediate comment was available from Treasury or the embassies of coalition members, which include the G7 rich nations, the European Union and Australia.
Separately, The Wall Street Journal reported on Friday that the United States and its allies had agreed on further details on which sales of Russian oil will face the price cap.
Each load of seaborne Russian oil will only be subject to the price cap when first sold to a buyer on land, the countries determined. Reuters could not immediately verify the report which cited people familiar with the matter.
(Reporting by Andrea Shalal and Timothy Gardner in Washington and Noah Browning in London; editing by Heather Timmons and Matthew Lewis)(c) Copyright Thomson Reuters 2022.
Join the 86,823 members that receive our newsletter.
Have a news tip? Let us know.