Caveats about its effectiveness Russian oil price ceiling say officials from the Biden administration, which has promoted the idea and is lobbying for its adoption by the superpower’s allies. Some in the Biden administration are increasingly concerned that their plan to cap the price of oil bought from Russia could fail after a sudden drop in production. OPEC+ last week.

The plan aims to keep sufficient Russian supplies to the global market to prevent a rise in global oil prices, but the proposal is complex and is under intense negotiations with European allies, Bloomberg notes. His outlook is now potentially undermined by OPEC+’s decision to cut production by 2 million barrels a day, the sources said.

However, the price cap plan is moving forward with broad support in the US administration and among many allies, the same sources added. This proposal is seen as the best of the bad options for limiting Russia’s oil revenues. Some officials are concerned that OPEC+ production cuts have increased market volatility and that the imposition of the cap could lead to higher prices. Vladimir Putin may respond by cutting off supplies, a person familiar with the matter said on condition of anonymity.

Representatives from the White House National Security Council and the Treasury Department did not immediately comment. The lockdown plan is designed to cushion an expected reduction in supply after European Union restrictions on sales in Russia go into effect later this year.

The EU has banned the import of Russian oil, and will also ban its companies from providing financing and insurance services for marine cargoes of Russian oil from December 5 for crude oil and from February 5 for oil products. The EU will also ban its companies from providing services for the delivery of Russian oil, provided that the G7 implements a price cap plan. The lockdown will allow buyers of Russian oil to access European services, but only if the purchase price falls below limits set by the US and its allies. This is yet to be determined. However, it is unlikely that the US and its allies will be able to limit Russia’s oil revenues, one of the sources said.