The CEO of energy major Shell, Ben van Beurden, has raised doubts about plans by the Group of Seven (G7) leading Western nations to impose a price cap on Russian oil to limit Moscow’s revenue from sales.
“You can see all the flaws already,” he told Bloomberg on Wednesday, noting that the system would work only if there were broad participation beyond Europe and the US.
Otherwise, “you will continue to just see what is currently happening, which is Russian crude will go to countries that are perfectly OK to still purchase Urals [Russia’s main crude export grade], for instance,” he explained.
According to Van Beurden, the world is heading for a “turbulent period” as tightening supplies of liquefied natural gas and oil exacerbate a global energy crunch.
The Shell CEO explained it would be hard to replace large swaths of Russian oil and gas that still flow into Western Europe. “There will be more LNG supply coming into Europe, but will there be a lot of extra new LNG supply to plug the gap? I don’t think so,” Van Beurden said.
He also pointed out that spare capacity from OPEC was lower than most believed or hoped, adding: “We’ll face tight markets unless there’s very significant fallout in demand.”
This week, the G7 economies reportedly agreed to explore the feasibility of a price cap on Russian oil exports.
The idea was first introduced by US Treasury Secretary Janet Yellen earlier this year, and was then taken up by the G7, which is considering the possibility of an embargo on the transportation of Russian seaborne crude oil unless it is purchased at or below a price to be agreed with international partners.
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