A New Push From The G7 To Cap The Price On Russian Oil

Credit: Reuters Bloomberg: US, Allies Discuss Capping Russian Oil at $40-$60 a Barrel to Cut War Financing 

(Bloomberg) -- The US and its allies have discussed trying to cap the price on Russian oil between $40 and about $60 a barrel, according to people familiar with the matter. 

Allies have been exploring several ways to limit Russia’s oil revenues while minimizing the impact on their own economies in discussions that began in the run-up to the Group of Seven summit. 

At the summit in Germany on June 28 leaders agreed to explore options to cap prices by banning insurance and transportation services needed to ship Russian crude and petroleum products unless the oil is purchased below an agreed price.  

Read more ....  

Update: G7 Leaders Closer to Propose Price Cap on Oil and Gas from Russian Pipelines (PTJ)  

WNU editor: The U.S. is justifying this approach to not only prevent funding for Russia's war machine, but to also prevent an economic catastrophe .... Biden's Russian oil plan aims to prevent an economic catastrophe (Axios). The Kremlin's response has been to condemn Japan for being the country tto propose what that cap will be .... Kremlin Slams Japan's 'Unfriendly' Stance Amid G7 Oil Price Cap Talk (Reuters), as well as warning that it will result in a massive increase in oil prices .... Oil prices could top $400 a barrel if Japan's crude price cap idea is adopted, says former Russian president (Business Insider). 

As to what is my take on this proposal to cap the price on Russian oil? 

I have trouble seeing how it can work for the simple reason that I do not see Russia willing to sell its oil or natural gas below market price. The altitude will be to keep it in the ground. If that becomes the case, expect a global oil shortfall of around 5 million barrels of oil, and no natural gas for Europe. The resultant price explosion will definitely put the global economy into a recession and it will spawn a debt and financial crisis that we have never seen in our lifetime. 

Bottom line. This price cap will not prevent an economic catastrophe as the Biden administration is claiming. It will only create one.

Update: Maybe not $380 a barrel. But $150 to $200 per barrel definitely .... Global oil prices could QUADRUPLE to $380 a barrel if Putin cuts supplies even further in revenge for Western sanctions, experts warn (Daily Mail).