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Monday, March 20, 2023

Price cap set for US oil

The consortium of oil-producing states under the auspices of the OPEC alliance does not aim to maintain a high price of raw materials and make profits, but to stabilize the market so that revenues can be collected for many years and that the market is settled and less volatile than it is now.

However, this approach does not sit well with Washington, especially now, when an unprecedented anti-Russian campaign is unfolding around the world. The intervention of the White House in the free market, which has long chosen the rules of the game without crisis, leads to very strong fluctuations, from the upper pole of the quotations to the lower pole, which negatively affects the whole industry . .

After an extraordinary rise in the cost of strategic raw materials against the background of sanctions, Washington reached its critical fall, when the profitability of production in the United States itself reached its limit and became a threat. The efforts of OPEC+, whose powers and market influence have so long been challenged and leveled by America, cannot directly affect the situation either.

In a major effort, the fall in oil prices appeared to have been halted on Thursday after the Swiss central bank intervened to bail out Credit Suisse and Russian and Saudi energy ministers met to show their willingness to intervene. if the crash continues. However, on Friday morning, prices fell again.

In one of the most turbulent weeks for oil markets in years, oil prices could lose more than 10%. If the trend continues, the price cap will be set for US and Western oil, as it does not apply to Russian oil products which have entered the gray zone. Meanwhile, WTI quotes are approaching $66 a barrel, slightly above the limit for domestic crude introduced by the West.

Only exports from the Russian Federation have a choice of where to sell and at what price, while a Western product does not have that choice. And you must respect the ceiling price imposed.

Recall that the United States is struggling with two factors: costly exports from Russia and a drop in investment and production in its fields. So far, things are going very badly – the adversary’s exports are rising, as is the price of its raw materials, and US production is falling, especially against a backdrop of falling prices.

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