The Ineffectiveness of Russia's Price Cap: A Costly Failure

A report by the Centre for Research on Energy and Clean Air (CREA) states that the G7 price cap on Russian crude oil has fallen short of its potential. The price cap, which allows Russian crude shipments to use Western insurance and financing if sold below $60 per barrel, has cost Russia an estimated $36.8 billion in export revenue. The sanctions have reduced Russia's oil export earnings by 14%, but a failure to enforce and consistently monitor the price cap has allowed Russia to undo the impact in the second half of the year. The U.S. has recently sanctioned vessels and their owners for violations related to the price cap.