Russian Oil Price Cap Faces Challenges Amid Growing Tanker Fleet and Western Sanctions

Russian crude oil producers are benefiting from cheaper freight rates to ship their oil to China and India, thanks to a growing number of vessels operating outside the purview of Western governments. This allows Russian firms to earn more than the $60 per barrel cap that the US and its allies had aimed to impose on Russia through sanctions. The increase in tanker fleet and lower freight rates mean that enforcing the price cap will have limited impact on Russian revenues. The US has recently imposed sanctions on tankers carrying Russian oil above the cap, but many vessels have already been re-registered in countries not imposing sanctions. As a result, Russian exporters are earning about $70 per barrel, well above the $60 price cap.