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G7 Weighing Tightening Russian Oil Price Cap
The Group of Seven is considering collectively tightening an oil price cap on Russian petroleum in an effort to cut Moscow’s oil revenues as the war in Ukraine rages on, Bloomberg has revealed. A draft statement seen by Bloomberg shows that these nations could task their finance ministers to collectively redraw the price limit–currently set at $60 a barrel for Russian crude.
Last December, the Biden administration tightened sanctions on Russian oil. Middlemen who supply Russian oil have stopped offering cargoes after the latest U.S. sanctions imposed by the Biden administration targeting Russian producers, tankers and insurers, Bharat Petroleum CFO has revealed. The sanctions have targeted Surgutneftgas and Gazprom Neft, two Russian oil firms that handle 25% of Russian oil exports. The two companies shipped an average of 970,000 bbls a day in 2024. Bharat Petroleum and other Indian state refiners buy Russian oil in the spot market, mainly from traders.
“We have not received any new offers for the March window (delivery). Traders are asking us to wait. We are waiting to get offers,” Vetsa Ramakrishna Gupta told Reuters on Wednesday.
“We are not expecting the similar number of cargoes that we used to get in the months of December and January,” he added.
Earlier, India announced that it will abide by the sanctions and turn away sanctioned tankers. Previously, we reported that the sanctions would severely disrupt Russian oil exports to India and China–the biggest buyers of Russian crude–and could also give Trump more leverage in future negotiations as he tries to end the war in Ukraine. Last year, India briefly overtook China as the largest buyer of Russian crude. However, India’s import of Russian oil in November plummeted 55% Y/Y to its lowest point since June 2022. This could be the result of the country trying to diversify its oil supplies to avoid overlying on a single country.
By Charles Kennedy for Oilprice.com
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Charles Kennedy
Charles is a writer for Oilprice.com
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Source: https://oilprice.com/
If the original cap which was set at $60 a barrel failed to affect Russia’s oil exports and was totally ignored and died peacefully, what gives the G7 the idea that tightening the price cap further will work?
Moreover, both China and India don’t recognize sanctions against Russia and therefore they will continue ignoring them and buying Russian crude in very significant volumes.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert