Liberia-flagged Aframax tanker Suvorovsky Prospect discharges fuel oil from Russia at the Matanzas terminal, in Matanzas, Cuba, July 16, 2022. REUTERS/Alexandre Meneghini/File PhotoRegister now for FREE unlimited access to Reuters.comSINGAPORE/WASHINGTON, Sept 9 (Reuters) – The price cap that G7 countries want to impose on Russian oil to punish Moscow should be set at a fair market value minus any risk premium resulting from its invasion of Ukraine, a U.S. Treasury Department official told reporters on Friday.The price should be set above the marginal production cost of Russia’s oil and take into consideration historical prices, said Elizabeth Rosenberg, U.S. Treasury Assistant Secretary for Terrorist Financing and Financial Crimes.The G7 price cap plan agreed last week calls for participating countries to deny insurance, finance, brokering and other services to oil cargoes priced above a yet to be set price cap on crude and two oil products. read more Register now for FREE unlimited access to Reuters.comRosenberg said services providers would not have to police price cap compliance themselves but could rely on the attestations of buyers and sellers, leaving enforcement to participating jurisdictions.She said the G7 countries – Britain, Canada, France, Germany, Italy, Japan and the United States – would work together in coming weeks to determine the capped price and other key implementation details.”There are several key data points we are considering and how the prices should ultimately be set and that includes the marginal cost of production for Russian oil,” Rosenberg told a briefing call held for media in Asia.”The price cap price should be … in line or consistent with historical prices accepted by the Russian market.”That could imply a potential cap of around $60 a barrel, experts say, as Russian Urals crude, based off of benchmark Brent, sold for $50 to $70 a barrel in 2019.Russian government documents have identified a marginal crude production cost of $44 per barrel, although some Western officials believe it may be somewhat lower.A European official said G7 members had not begun formal discussions about the price cap, although officials had “notions” about what was possible.”The idea is that you still incentivize Russian oil producers to export by guaranteeing a price in line with their cost of production with a small incentive,” the official said.U.S. Treasury Secretary Janet Yellen and other Biden administration officials have been travelling to oil consuming countries to promote a mechanism that seeks to cut Russia’s oil export revenues, the lifeblood of its war machine, without reducing volumes of Russian shipments to global markets.Russian President Vladimir Putin has said Russia would halt shipments to countries that impose the price cap. read more Putin says Russia is conducting a “special military operation” in Ukraine to protect his country’s security against expansion of the Western military alliance NATO. read more Register now for FREE unlimited access to Reuters.comReporting by Florence Tan in Singapore, and David Lawder, Timothy Gardner and Andrea Shalal in Washington; Writing by Timothy Gardner and David Lawder; Editing by Christian Schmollinger and Tom HogueOur Standards: The Thomson Reuters Trust Principles. .
Palm oil vaults to historic premium over soyoil in India, sparking shifts in buying patternsThe Black Sea accounts for 60% of world sunflower oil output and 76% of exports. Ports in Ukraine will remain closed until the invasion ends. read more “Asian and European refiners have raised palm oil purchases for near-month shipments to replace sunoil. This buying has lifted palm oil to irrational price level,” said a Mumbai-based dealer with a global trading firm.”They have the option of buying soyoil as well. But prompt soyoil shipments are limited and they take much longer to land in Asia compared to palm oil,” he said.Soybean production in Argentina, Brazil and Paraguay is expected to fall because of dry weather. Price-sensitive Asian buyers traditionally relied on palm oil because of low costs and quick shipping times, but now they are paying more than $50 per tonne premium over soyoil and sunoil, said a Kuala Lumpur-based edible oil dealer.Palm oil’s price premium is temporary, however, and could fade in the next few weeks as buyers shift to soyoil for April shipments, the dealer said.Most of the incremental demand for palm oil is fulfilled by Malaysia, as Indonesia has put restriction on the exports, said an Indian refiner. “Malaysian stocks are depleting fast because of the surge in demand. It is the biggest beneficiary of the current geopolitical situation,” he said.Register now for FREE unlimited access to Reuters.com
