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Russian Oil Price Caps
G7 statement was pretty vague on how they would actually go about doing this …
“In line with our extensive and ongoing engagement with a diverse group of countries and key stakeholders, we invite all countries to provide input on the price cap´s design and to implement this important measure”
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Where are the problems?
1. This is not enforceable. Other countries do not have sanctions …they do not have to follow the G7
2. Russia announced it will not sell to countries that enact price caps
3. India is providing safety certification through IRClass (which provides cert and insurance) for ships managed by a Dubai subsidiary of the Russian shipping group Sovcomflot.
4. Own benchmark… right now Russian crude is expressed as a discount to Brent >> they have an oil trading platform that they can build out via RTS and MICEX and clear through MIR which is the Russian version of Swift
This cap also overlooks how Russia could influence global oil prices…
Really Russia could just opt to cut off EU and NATO and shut some production thereby raising global prices…just as they did to the EU with gas in retaliation today
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