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Biden Seeks a Global Agreement Cap Russian Oil Prices


Essay by Eric Worrall

Biden thinks he can reduce the money flowing to Russia’s military by organising a global oil purchasing cartel.

US, Allies Discuss Capping Russian Oil at $40-$60 a Barrel to Cut War Financing

US also weighing enforcement tools, including sanctions

Secondary sanctions seen as a measure of last resort

By Alberto NardelliJennifer Jacobs, and Annmarie Hordern
7 July 2022, 01:25 GMT+10

The US and its allies have discussed trying to cap the price on Russian oil between $40 and about $60 a barrel, according to people familiar with the matter.

Allies have been exploring several ways to limit Russia’s oil revenues while minimizing the impact on their own economies in discussions that began in the run-up to the Group of Seven summit. 

At the summit in Germany on June 28 leaders agreed to explore options to cap prices by banning insurance and transportation services needed to ship Russian crude and petroleum products unless the oil is purchased below an agreed price.

A more specific threshold would depend on market conditions when a cap is agreed and those could change significantly. Before Monday’s mini-rout in headline oil prices, Russian crude was probably trading around the $80-a-barrel mark. Information about transactions in the nation’s barrels has become less visible since the invasion.

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This cartel has no chance of working, like a lot of Biden’s economic ideas. India makes no secret they are buying all the oil Russia can ship, and are probably even shipping some of their imported Russian oil to Europe. Hunter Biden’s Chinese oil company may be doing likewise.

A purchasing cartel can only work if buyers can live without the commodity being targeted, long enough for the seller to be forced to lower prices. Given that Russian energy exports have continued without significant interruption since the start of the Ukraine conflict, I’m guessing Russia will laugh off such threats.

The only way the USA could unilaterally choke off the supply of Western money to Russia is to crash the global price of oil, by abandoning US domestic green policies, and encouraging US producers to flood the global market with a deluge of cheap US oil. But this doesn’t seem likely to happen anytime soon – Biden can’t even muster the political courage to face down greens in his own administration, to lower gasoline prices for Americans.

via Watts Up With That?

July 10, 2022

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