Economist to QNA: Russian Oil Price-Cap Will Lead to Higher Prices

Doha, December 05 (QNA) - The price cap on Russian oil imposed by the US, EU, and Australia, as well as the decision of OPEC+ to keep production output unchanged saw crude brent prices jump 2.2 percent. Economist Dr. Abdullah Al Khater told Qatar News Agency (QNA) that the price cap will have negative repercussions on the market structure and could lead producers to seek new markets. He said this was already taking place, with supply turning to Asian markets that follow supply and demand. He cited Russia's announcing its willingness to sell oil to friendly countries at any price, as an example of that. He added that Russia turned to other markets, including Asia, to address any potential shortfall in sales. He highlighted Indonesia's announcement that it received an offer to buy Russian oil at a 30%-discount to the international market price. This comes after the price cap of $60 a barrel set by the US, EU, and Australia went into effect this morning, in a bid to lower Moscow's oil revenues. Sri Lanka is also in negotiations with Russia over getting oil at a discount to the global price, in light of its economic crisis. Myanmar is also buying Russian, in a bid to tackle high inflation. Bangladesh meanwhile said its intent on importing Russian oil. India is also meeting its demand for oil and coal from Russia. Al Khater told QNA that such decisions will have a long-term impact on supply in the market, adding that he expects it to lower investment in oil and gas, which could lead to even higher prices. He also said that setting a price cap will lead to higher prices, which is the opposite effect the countries setting the cap are hoping to have. He said prices will rise because the cap essentially ruled Russia out of the market, something other producers can take advantage of to drive prices higher. He also said that countries without a diversified source of energy cannot address their challenge by setting a price cap, but that they will have to ensure the energy market gets to balance. (QNA)