Russian Expert Prokhvatilov In Pro-Kremlin Media Outlet Vzglyad: 'A Price Cap On Russian Oil Is A Useful Stupidity'

On September 5, 2022, Vladimir Prokhvatilov, president at the Academy of Real Politics, published an article in the pro-Kremlin media outlet Vzglyad, titled "A Price Cap On Russian Oil Is A Useful Stupidity." According to Prokhvatilov, a price cap on Russian oil is a "ludicrous idea."

Prokhvatilov added: "Any intervention in the global market, and the energy market is global, causes oil price tags to rise, even as the U.S., China and other countries are in recession. And when the world economy will overcome the stagnation and begin to accelerate, oil prices will simply go through the roof. However, let's not get into the business of schooling leaders of the Western world on economics. Let's not impede them from hurting themselves."

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Following is the article:[1]

"The Collective West Expects To Implement All These Bans By Blocking Insurance Contracts On Russian Oil"

"During an online summit held on September 2, the finance ministers of the G7 member-states agreed to impose a price ceiling on Russian oil in order to reduce Russia's export revenues, as well as to potentially reduce global energy prices, reads the G7 joint statement.

"The G7 includes the United States and Canada, which already back in the spring refused to buy Russian oil, Great Britain (which in June completely severed the import of Russian oil and gas), Japan (which significantly reduced its oil purchases), as well as Germany, France, and Italy. On May 30, the European Union imposed an embargo on shipments of oil and oil products from Russia by sea set to begin December 2022. 'So, Putin's opponents came up with a new idea: to prompt Russia to sell its oil so cheaply that it can no longer afford to wage war. The move, although risky, would also help the global economy to fight high energy prices that are exacerbating inflation,' The Washington Post wrote.

"The collective West expects to implement all these bans by blocking insurance contracts on Russian oil. Will these 'Billy Bones [a pirate from Robert Louis Stevenson's 19th-centurynovel Treasure Island] dreams,' I meant, dreams of the leaders of the Western world come true? Leading American analysts are convinced that they most likely will not.

"In an interview with CNBC, the Director at the Institute for the Analysis of Global Security, Gal Luft, said, 'A price cap on Russian oil is a 'ludicrous idea' that could skyrocket oil prices up to 140 USD per barrel.' 'Those Europeans and Americans who talk about oil price of 40 USD per barrel will get it at 140 USD a barrel,' Luft warned, adding that 'one can't cheat the laws of supply and demand.'"

"Even The Very G7 Admits The Pointlessness Of The Imposed Price Ceiling, Since Neither India Nor China Supported Them"

"Bloomberg leading expert, Javier Blaz, derided the G7 decision: 'You know, it's like my friends and I hanging out in a bar and then ask owner to lower the price of beer. In response, the owner tells us to piss off, saying that he won't serve beer to us. [So] here we are, sitting happy, not drinking beer, observing that the bar is full anyway and that everyone is drinking a lot of beer. Thus, a question appears: What to do next?'

"The restrictions invented by the G7 are also being ridiculed by the tycoons of the U.S. oil business. For instance, the owner of the largest American refinery 'United Refining Company,' John Catsimatidis said: 'Everything we do to spite the Russians turns out to be a story from a comic strip. It doesn't work.'

"The oil tycoon urged Biden to boost U.S. production rather than fight oil [supplies] from Russia. Meanwhile, the Biden administration's stubborn struggle for a 'green economy' against its oil and gas industry has caused the U.S. strategic oil reserves to fall to a record low.

"Even the very G7 admits the pointlessness of the imposed price ceiling, since neither India nor China supported them. Russia has already become India's second largest oil supplier, 'pushing Saudi Arabia into third place, but still lagging behind Iraq,' the Hindustan Times newspaper reported. India resells Russian oil to the West, albeit with a hefty margin. The United States is also actively buying Russian oil, masterfully circumventing its own sanctions, which permit oil imports as long as Russia's share in it is not higher than 25 percent.

"Contrary to the will of the State Department, 'oil traders conceal the origin of Russian oil and supply it to the United States,' The Wall Street Journal admits. The absurdity of capping the price of Russian oil is exacerbated by the fact that, amid a global economy recovering from a [COVID-19] pandemic, the demand for oil is gravely outpacing supply.

"Experts at the American Energy Intelligence (EI) analytical agency predict an oil demand to grow by 2.3 million bpd in 2022. This is slightly above the forecast of the International Energy Agency (IEA) and of the Energy Information Administration of the U.S. Department of Energy (EIA), which also forecast an oil shortage.

"The stagnation of drilling and investment activity in the U.S. oil industry, as well as the persistent reluctance of OPEC+ member-states to increase [their] production volumes against the backdrop of sanctions on Russian oil, may push oil prices to reach a mark of 120 USD per barrel and higher, Professor at the Russian School of Economics Alexander Malanichev claimed.

"What's more, 'the desire of the United States and of its allies to set a price ceiling for Russian oil could lead to the destabilization of the whole market,' Ryan Sitton, former commissioner at the Texas Railroad Commission (the oil regulator of the country's largest oil producing state), said in interview to RIA Novosti news agency.

"'The endeavor would end with the price being fixed for the entire market. The problem is that, once again, it will destabilize it. If I can buy Russian oil at 60 USD per barrel, then why would I buy it from someone else?' wondered the expert. 'If you ask investors in the oil business to continue investing in oil production, they will refuse, because there will be an opportunity to buy cheap Russian oil,' Sitton said."

"When The World Economy Will Overcome The Stagnation And Begin To Accelerate, Oil Prices Will Simply Go Through The Roof"

"There is no doubt: market destabilization will inevitably be followed by a decline in investment in the oil sector. This will further reduce the supply on the world oil market and drive-up oil prices even more. The EU leaders also have doubts about the effectiveness of the struggle against Russian oil supplies. For instance, German Chancellor Scholz stated that the price ceiling for Russian oil must be agreed upon with the majority of the international community. 'This mechanism can only function on the global level,' [Scholz] said.

"Actually, with these words, the German Chancellor demonstrated his ignorance in economics. Even if all countries of the world formally join all sorts of prohibitions and restrictions on Russian oil, it would still be of no use.

"A simple example. What would happen if you mixed oil [produced] by sanctioned [countries] such as Venezuela, Iran and Russia? Answer: Malaysian oil. Imports [of Malaysian oil] to China are exceeding 0.8 million barrels per day, even although Malaysia itself produces less than 0.6 million barrels per day.

"Any intervention in the global market, and the energy market is global, causes oil price tags to rise, even as the U.S., China, and other countries are in recession. And when the world economy overcomes the stagnation and begins to accelerate, oil prices will simply go through the roof. However, let's not get into the business of schooling leaders of the Western world on economics. Let's not impede them from hurting themselves."