Essay by Eric Worrall
Biden thinks he can reduce the flow of money into Russia’s military by organizing a global oil purchase consortium.
US, Allies discuss capping Russian oil to $40-$60 a barrel to cut funding for war
The US also considers enforcement tools, including sanctions
Secondary sanctions are considered a measure of last resort
According to people familiar with the matter, the US and its allies have discussed trying to limit the price of Russian oil to between $40 and $60 a barrel.
The allies have been exploring a number of ways to limit Russia’s oil revenues while minimizing the impact on their own economies in discussions that began ahead of the Group of Seven summit.
At a summit in Germany on June 28, leaders agreed to look for options to cap prices by banning the insurance and transportation services needed to ship crude oil products. and Russian oil unless the oil is purchased below the agreed-upon price.
A more specific threshold will depend on market conditions when limits are agreed, and those thresholds can vary significantly. Ahead of Monday’s small oil rally, Russian crude is probably trading around the $80 mark per barrel. Information about transactions in the nation’s barrels has become less visible since the invasion.
This cartel has no chance of working, like many of Biden’s economic ideas. India makes no secret that it is buying all the oil that Russia can shipand may even be shipping some of their Russian imports to Europe. Hunter Biden’s China Oil Company may be doing so.
A purchasing cartel can only function if the buyer can live without the targeted goods, long enough for the seller to be forced to lower the price. Given that Russia’s energy exports have continued without significant disruption since the start of the Ukraine conflict, I would expect Russia to dismiss such threats.
The only way the United States can unilaterally cut off the supply of Western money to Russia is to lower global oil prices, by abandoning America’s domestic green policies, and encouraging American producers to flood the market. global market with cheap US oil. But this doesn’t seem to be happening anytime soon – Biden can’t even muster the political courage to face the pitfalls of his administration, to bring down gasoline prices for Americans.