Sanctions on Big Important Players in World Economy Do Not Work Anymore: Russian Oil Shatters G7 Price Caps in Defiance of Sanctions

 

"The latest oil price-tracking data suggests Russian crude oil is currently selling for about $75 per barrel, which is far above the $60 cap imposed by the Group of Seven nations (G7) in 2022.

 

Russian oil is trading even higher in markets like India, suggesting the G7 effort to starve Russia of oil revenue is failing.

 

Bloomberg News reviewed data on Wednesday from one of the premier oil price trackers, Argus Media, to determine that Russian oil is currently valued at $75 a barrel when it leaves Black Sea and Baltic Sea ports.

 

In India, oil from the Urals is trading at $88 a barrel, which is only a $3.80 discount below the global benchmark. Russia was originally forced to sell its oil at steep discounts after it drew Western sanctions, but that no longer seems to be the case.

 

Argus Media said news is that Russia pays far more to ship oil to customers in Asia than to its old customers in Europe, which eats up about $7 to $8 of profit from each barrel sold – but even those high shipping costs are declining, which puts more money in Moscow’s pocket.

 

The bad news is that those high prices mean Western shipping companies have not been honestly reporting the value of the Russian oil they transport.

 

Bloomberg reported:

 

    The cap requires that any western company involved in transporting Russian oil receives a so-called attestation, a document vouching that the cargo cost $60-a barrel or less. If it doesn’t, they’re not allowed to provide their services. The fact that Argus’s prices are so far above that level creates a dissonance.

 

    While Urals has been above $60 almost all year, this month’s surge to well above $70 will make [sic] stretch the credibility of those attestations for traders wanting to keep using western services.

 

    In March, 23% of the nation’s crude oil shipments had insurance against spills and collisions provided by members of the International Group of P&I Clubs, data compiled by Bloomberg show. That means traders would have vouched that the cargoes cost well below where Argus assessed the Urals price to be. A smaller proportion moved on Greek tankers, all of which had cover from IG clubs, also requiring attestation.

 

Bloomberg News noted that U.S. officials claim they will vigorously enforce the price caps on Russian oil, but they might be reluctant to take strong action because it would raise oil prices worldwide, causing American consumers more pain at the pump during the 2024 presidential election.

 

The G7 tightened its enforcement mechanisms in December to counter widespread noncompliance. One of the new measures was the “attestation” requirement for full disclosure of cargo value that Bloomberg referred to. Attestation was intended to keep buyers from paying above-cap prices for Russian oil and disguising the extra payments as shipping costs.

 

The U.S. Treasury Department insisted in January that compliance was increasing and price caps were cutting deeply into Russia’s oil profits.

 

The Russian Finance Ministry claimed oil and gas income was down 24 percent last year, but most of that was due to falling oil prices and the loss of gas sales to Europe. The Russians predicted they would be able to recover most of that lost revenue in 2024 by shipping more oil to new customers in China and India."

It is quite clear that Mr. Landsbergis is not catching any mice here at all. After all, Mr. Landsbergis is a genius who has already defeated the Chinese dragon. Why does he not rise from the bed and destroy India?