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The Geopolitical Ramifications Of Price Caps

Price Cap Politics

There is a notion making the rounds among Middle Eastern analysts that the region is uneasy about the G7 price cap because it’s an energy weapon that the West could turn on OPEC members with which the West has precarious relations. The jury still seems to be out as to whether this new oil price weapon will fail (largely depending on China and India) or whether it represents a future threat to Middle Eastern and African OPEC members.

By Tuesday, Turkey said it had resolved the bottleneck of oil tankers waiting to pass through its straits due to insurance issues related to the newly implemented price cap on Russian oil and various sanctions. Some 20 vessels had been stalled at the Bosphorus and Dardanelle straits. On Monday, four were allowed through, and on Tuesday, Turkish media reported only 8 tankers waiting to pass at the Bosphorus and another 6 waiting to schedule at Dardanelle. Wait times have been cut in half from last week.

??EU energy ministers on Tuesday failed to reach a deal on a price cap on Russian natural gas during an extraordinary meeting. EU countries are extremely divided on a cap, and in those cases where they agree on a cap, cannot agree on a price. The next meeting is now set for December 19th.

As the price cap takes hold and with the EU ban on Russian seaborne crude underway since December 5th, Germany is eyeing a potential deal with Kazakhstan to feed German refineries. Kazakhstan could pipe up to 5 million…


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