Russian oil price cap is ‘dangerous,’ will be hard to remove: TotalEnergies CEO

Capping the price of Russian oil is “dangerous” for markets and will be difficult to remove, TotalEnergies CEO Patrick Pouyanne warned March 8.

The head of the French oil major told delegates at the CERAWeek by S&P Global energy conference that when governments put a cap on markets, it’s “dangerous, very dangerous” and would be “more complex to remove.”

The G7’s price cap on seaborne Russian crude came into effect Dec. 5, curbing access to shipping insurance and services unless the oil was bought for less than $60/b. A similar cap on Russian oil product exports came into effect Feb. 5.

Russian oil demand is expected to contract by 140,000 b/d, or 3.8%, this year, partly due to the impact of international sanctions, according to research by S&P Global Commodity Insights. S&P Global oil analysts expect Russia supply losses to peak at 600,000 b/d below pre-war levels in March.

In contrast to pushback from many of his counterparts in international oil companies speaking at the Houston event, Pouyanne said so-called windfall or “supertaxes” in Europe imposed on energy producers “were quite reasonable” in the current market.

In the UK, the government has introduced an energy profits levy for North Sea operators to raise the overall tax rate to 75%. The government portrayed the measure as responding to “extraordinary” oil and gas prices and energy company profits.

Pouyanne said the decision to cap vehicle fuel prices at TotalEnergies service stations in France to help soften the blow of higher costs to consumers was “a way to contribute to the society.” The company said last month that gasoline and diesel it retails in France would not go above 1.99euro/liter.

Refineries in France are suffering from workers strikes which have threatened to disrupt the supply of products into the market. TotalEnergies confirmed blockades at some of its refineries on March 7 and 8, adding that there were no shortages of refined product at retail stations while stocks at oil depots were high.
Source: Platts