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Oil from Iran and Venezuela needs to return to the global market to make up for the loss of supply from Russia, an official at the French presidency said on Monday while G7 leaders are meeting in Germany to discuss the Russian invasion of Ukraine and a price cap on Russian oil.
France also seeks the G7 group of the world’s leading industrial nations to adopt a price cap on oil that would be broad and not limited to Russian oil only, according to Reuters.
The leaders of the G7 group consisting of Canada, France, Germany, Italy, Japan, the UK, and the United States, are meeting in Germany for a three-day summit between June 26 and 28 and are discussing capping the price of Russian oil.
According to a senior official at the French presidency, cited by Bloomberg, a discussion with all oil producers regarding a price cap should be held. Diversification of supply and an increase in oil production in the short to medium term will also help lower prices, according to France.
While Iran and Venezuela can, in theory, offer additional supply, there is a “knot” to be untied for Iran to return to the oil market, the French official was quoted by Bloomberg as saying.
The U.S. has reportedly eased some sanctions on Venezuela to allow Europe to buy some volumes of Venezuelan crude as European refiners scramble for alternatives in the wake of the EU embargo on Russian seaborne imports, expected to officially kick in at the end of this year.
Getting Iran on the market would be easier said than done, considering the stalemate in the so-called Iran nuclear talks. Last week, Iran blamed the U.S. for the stalled talks on the revival of the nuclear deal. If the world powers and Iran somehow manage to save the deal, the flow of Iranian oil abroad could increase by between 500,000 bpd and 1 million bpd, according to analysts.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.