The G7's suggested price cap for Russian oil is somewhere between $60 and $70 a barrel. Last week some EU member states suggested adopting a similar figure. This is currently higher than a barrel of Russian oil sells for.

Several countries, including the Baltic states, disagree and Estonia has threatened to veto the decision. It was reported Poland said the limit should be $30. 

LHV economic analyst Kristo Aab told Monday's "Aktuaalne kaamera" the $60-$70 cap would not have the desired effect.

"It seems that this price cap has been chosen for inflationary reasons rather than to reduce production or to reduce Russia's revenues," he said.  

Aab said, to be effective, the ceiling cannot be higher than the break-even point. But this raises another question: Where exactly is this point? 

"Various estimates of the Russian producer price hover around $45-50 a barrel, which would be the break-even point for Russian oil producers. Although this is also a bit debatable, as Russia produces oil both onshore and in the Arctic Ocean, and these break-even points are very different," said Aab.

He said this measure may prove ineffective anyway as other countries can always find loopholes to buy Russian oil.

Fuel seller Neste told AK the market is currently affected by three factors.

"One is, of course, the introduction of a price cap by the European Union. Meanwhile, the OPEC+ countries will meet later this week to discuss increasing production and how to make up the shortfall caused by the loss of Russian oil," Neste's marketing and communications manager Risto Sülluste said.

The third point is China and its zero-covid policy. Its strict containment measures have reduced oil consumption by 40 percent.

"If China fails to contain Covid, and consumption and demand remain low, this could drive oil prices down. If this fall in prices reaches the finished product price, it will certainly be reflected in our prices," Sülluste said.

While gasoline consumption usually drops in winter, the demand for diesel may rise this year, pushing up prices, as it can be used as an alternative to gas for heating purposes.

European refineries have little capacity for diesel, AK reported.

Circle K: OPEC meeting could push prices higher

Oil prices fell on Monday morning, with Brent crude trading at $81 compared to last week's $83-$90.

Due to China's decreased consumption, oil prices will drop in the short term but the Russian oil embargo, which will be implemented on December 5, will likely push prices up again in the long term, Circle K's motor fuel pricing manager Indrek Sass said.

"Oil prices have indeed taken a downward turn, mainly due to the news from China. Part of the impact is also coming from the recovery in global inventories and the associated fall in demand," he said.

All eyes will be on OPEC's December 4 meeting, he said. The group could decide to cut production in order to raise prices again.

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