September 08, 2022

Russia Is Making a Killing Selling Oil. A New Plan May Finally Stop That.

By Rachel Ziemba

U .S. diplomats have spent months hawking a plan to cap the price of Russian oil cargoes. Last week, they finally won the endorsement of several other big democracies. But much about the plan remains unsettled. Its goal is to cut Russia’s energy revenues in order to degrade the Russian military machine, all without hurting global consumers. Doing so will be a tough balancing act, particularly as the energy price spike in Europe and globally worsens and the economic outlook weakens and segments.

To succeed, the G7 needs both major emerging-economy buyers and Russia to at least partly comply. The pitch to non-G7 buyers of Russian oil such as India and China is even cheaper fuel than they are currently getting, without elevated sanctions risks.

The plan was endorsed Friday by the G7, whose members are Canada, France, Germany, Italy, Japan, the U.K., and the U.S. The European Union participates, too, and also supported the plan. Those countries can’t direct the price of Russian oil on global markets. Instead, the cap works by restricting access to the services Russia requires to get oil from its ports to consumers in other countries. Those include insurance, shipping, bunkering and other associated financial services. The G7, especially European countries, dominate such services, especially shipping insurance in the global tanker trade. At present, as much as 90% of associated insurance is booked in Europe, primarily through the insurance syndicates of U.K.-based Lloyd’s. Most tankers fly European flags. And services such as brokering and bunkering are run through Europe.

Read the full article from Barron's.

  • Congressional Testimony
    • September 20, 2022
    Under the Radar

    My testimony will address China’s progress in building out alternative payment systems, the strategic implications of growth in China’s alternative payment systems, and recomm...

    By Emily Jin

  • Reports
    • September 19, 2022
    Rewire: Semiconductors and U.S. Industrial Policy

    As the United States considers industrial policy for the first time in decades, it should learn lessons from prior government efforts to shape the semiconductor industry, in t...

    By Chris Miller

  • Commentary
    • The Atlantic Council
    • September 14, 2022
    Sand in the silicon: Designing an outbound investment controls mechanism

    Recent congressional efforts to establish new authorities to regulate outbound investment have revived a long-simmering debate in Washington about the economic and security ri...

    By Emily Kilcrease & Sarah Bauerle Danzman

  • Video
    • September 14, 2022
    The Heat: President Xi Visits Central Asia

    Rachel Ziemba joins CGTN America to discuss the significance of President Xi's visits to Central Asia. Watch the full interview from CGTN....

    By Rachel Ziemba

View All Reports View All Articles & Multimedia