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Russia successfully bypassed the G7 oil price ceiling

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

By Rhod Mackenzie

The collective West, led by the United States, seems to have miscalculated once again. This time, Washington, London and Brussels clearly overestimated the importance of Western insurance companies, which were seen as the main means of enforcing the price cap on Russian oil introduced by the G7 at the end of last year. To be fair, Western insurers, especially European ones, do dominate the maritime logistics sector. But as it turns out, it was not the ‘magic bullet’

According to an article in the Financial Times (behind a paywall), around 75% of the oil transported by sea from Russia last summer was insured by non-Western companies. This is about 50% more than this spring, according information provided by Kpler and insurance companies. The statistics mean that Moscow has worked out to circumvent the G7 oil price ceiling. According to analysts at the Kiev School of Economics (KSE), this means that the continuous rise in oil prices since July, together with Moscow’s successful reduction of the discount on Russian oil, will allow Russia to earn at least $15 billion more from its sales in 2023 than the price ceiling expected by the authors of the price cap.
“The way Russia is now transporting its oil could make it very difficult to make the price ceiling work in the future,” says KSE economist Ben Hilgenstock. “To our great regret, we did too little to enforce the price ceiling when it was still possible.”

The West believes that the ban on exports of diesel and other fuels by Russia, which is one of the world’s biggest exporters of diesel fuel, means that Moscow is going on the offensive in the oil market. The FT believes that Russia is trying to repeat with oil and petroleum products what it allegedly did with gas last year, namely create an energy crisis. This is further proof, if not of its failure, then at least of the lack of effectiveness of the price cap, the main aim of which was to maintain the supply of Russian oil and petroleum products to the world market but ensure that it suffered a sharp drop in oil revenues.

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Russia successfully bypassed the G7 oil price ceiling

By Rhod Mackenzie The collective West, led by the United States, seems to have miscalculated once again. This time, Washington, London and Brussels clearly…

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

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Guy Thornton
Guy Thornton
September 25, 2023

“Russia is trying to repeat with oil and petroleum products what it allegedly did with gas last year, namely create an energy crisis.”

I don’t remember Russia being responsible for a gas crisis last year…they offered to sell to anyone who wanted to buy…they weren’t the ones who blew up NS2.

Gold and interest rates have diverged

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