Russian oil sanctions not working – analysts – RT Business News

The restrictions were invented by bureaucrats who don’t understand how markets work, industry experts tell CNBC.

Western-imposed sanctions on Russian crude oil exports have so far “completely failed” and new price caps could also prove ineffective, according to a CNBC report on Friday, citing analysts.

The report comes as the European Union plans to ban imports of Russian refined petroleum products, including diesel and jet fuel, from February 5.

The bloc had already banned maritime crude oil imports from Moscow in December. The EU, G7 countries and Australia have also set a price cap of $60 a barrel, which prevents Western companies from providing insurance and other services to shippers of Russian oil unless the cargo is purchased at or below the set price.

The ceiling price “was invented by bureaucrats with degrees in finance. None of them really understand the oil markets,” Paul Sankey, president and principal analyst at Sankey Research, told CNBC. “It was a total bomb; he completely failed,” he underlined.

According to Sankey, the supply of Russian oil has not been significantly interrupted and “they supported exports at high levels.”

“I heard from a big source that the Saudis asked why Russian oil was still flowing,” he said. “It brings up the question of what will happen with the upcoming product sanctions, because it just doesn’t seem to be working.”

Founder of analytics firm Vanda Insights, Vandana Hari, also told the US broadcaster that she was skeptical of upcoming restrictions on Russian refined petroleum products, noting that “The crude price cap was fairly inconsequential.”

“I think the refined product caps they have – about $100 [per barrel] for diesel and clean goods and maybe around $45 for dirty fuels like fuel oil – will probably also be irrelevant,” explains the analyst.

According to Hari, Russian oil will find its place in markets that are “always welcoming” like China and India.

“China and India benefited a lot last year from heavily discounted Russian crude prices and the same goes for Russian refined products,” he added. Hari predicted, adding that it could be more difficult for Moscow to find markets for such products.

Paul Sankey also noted that “Oil friendships are fat” and there are many different ways to transport Russian oil around the world, bypassing price caps.

Meanwhile, the EU is struggling to agree on a price cap for Russian petroleum products, with some members saying the proposed level is too generous for Moscow and seeking a lower cap. The measures are set to come into force on February 5 after gaining approval from all 27 EU member states.

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