March 15, 2024
A New Approach to Sanctions Is Pushing Up Energy Prices and Crimping Russia’s Revenue
The cat-and-mouse game between authoritarian energy powers and the U.S. and its allies often seems unwinnable. Russia, Iran, and Venezuela all have continued to export energy despite Western sanctions. But there are indications that the sanctioning countries might finally be having some success. They’re using the policy tools they built last year to potentially restrict their adversaries’ revenues and push global energy prices higher.
Heightened U.S. sanctions enforcement has also raised the importance of China as the buyer of last resort for Russia.
Few in the West were ready to do without supply from Russia, one of the world’s largest energy producers or, pay the financial cost of quitting it, particularly not if other producers like Iran and Venezuela were also sidelined. The solution was a price cap, a maximum price placed on purchases of Russian oil shipped with Western services such as insurance. The Group of Seven, along with other allies, adopted the policy in 2022. Only recently did they shift into enforcement mode on this policy, and coupled it with new threats on Russia’s non-energy trade.
This shift has been a long time coming, and there are signs it is having an effect. Russian fuel export volumes are down, including to major buyers such as India, who may be using the tighter environment to negotiate on price. Discounts on fuel are up. Sanctions-sensitive shippers—European Union companies—are also finally exiting the trade.
Read the full article from Barron's.
More from CNAS
-
Energy, Economics & Security / Technology & National Security
Sharper: Chips and Export ControlsAs competition between the United States and China has intensified, advanced technology has become the latest battlefield. After years of restricting China’s access to advance...
By Charles Horn
-
Energy, Economics & Security / Technology & National Security
Export Controls: Janet Egan, Sam Levy, and Peter Harrell on the White House's Semiconductor DecisionJanet Egan, a senior fellow with the Technology and National Security Program at the Center for a New American Security, discussed the Trump administration’s recent decision t...
By Janet Egan
-
Indo-Pacific Security / Energy, Economics & Security
Can India Survive the Trade War?India has little choice but to try to soothe simmering trade tensions with the U.S. without abandoning its redlines, while carefully managing the implications of increased coo...
By Eleanor Hume & Kyle Rutter
-
Bloomberg Scoop: Trump’s Team Said to Be Exploring Stake in Intel
Geoffrey Gertz of the Center for a New American Security joins to discuss his takeaways as the administration demonstrates willingness to intervene in the economy much more di...
By Geoffrey Gertz