What’s the Effect of Europe’s Planned Price Cap on Russian Oil?

Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security think tank, said “this will be an interesting few weeks and few months”.

“Russia has made is clear the countries that abide by the cap won’t receive their oil and that could result in cuts to natural gas exports as well,” she said.

Russia has said it will not observe a cap and will halt deliveries to countries that do. While Russia could ignore the cap if it’s above the selling price of its oil, a lower limit could see Moscow retaliate by shutting off shipments in the hope of profiting from a higher global oil price on whatever it can sell around the sanctions.

Buyers in China and India might not go along with the cap, while Russia or China could try to set up their own insurance providers to replace those barred by US, UK and Europe. Russia could also sell oil off the books by using “dark fleet” tankers with obscure ownership, as have Venezuela and Iran.

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