Moscow sells raw materials more expensively
A lack of control leaves oil price caps full of holes
September 11, 2023, 1:17 p.m
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Western states are putting together numerous sanctions packages against Russia. An important component of this is the oil price cap. Russia is therefore not allowed to sell the raw material for more than $60 per barrel. According to Kiev, however, it achieves higher prices. There is apparently a lack of controls.
The price cap for Russian oil introduced by Western countries is apparently not working. As a result of the global price increase on the raw material markets, oil of the Russian Urals variety has also recently become significantly more expensive, the “Spiegel” reported with reference to experts. Accordingly, there is a problem with the implementation of the measure, which was intended to reduce the Russian state’s income for its war of aggression in Ukraine.
G7 states, the EU and Australia agreed last year that no more than $60 per barrel should be paid for Russian oil. This should be enforced internationally with the help of the market power of the industrialized countries in the areas of shipping companies and insurance companies. They should undertake to no longer transport Russian oil purchased at higher prices.
However, according to research by the KSE Institute of the Kyiv School of Economics, Russian oil was sold at significantly higher prices in the country’s most important export ports, most recently for more than $70 per barrel. The regulation devised by Western countries can only work “if governments credibly demonstrate to companies that they will enforce it,” said Benjamin Hilgenstock from the KSE Institute to “Spiegel”.
However, shipowners and insurers have so far only had to obtain a half-page “attestation” from their customers. According to the report, it is unclear whether and how this will be controlled. The EU Commission referred to the responsibility of “various” national authorities; so far there have been no reported violations.