Can the New Oil Price Cap Starve Russia's War Effort?

Sanctions imposed on Russia by the US and its allies failed to starve President Vladimir Putin of funding for his war in Ukraine because there were still plenty of ready buyers of Russian oil. So Putin’s adversaries spent months devising a Plan B: force Moscow to sell the oil so cheaply that its profits collapse. What isn’t clear is whether the price cap eventually agreed to in early December is low enough to really hurt Putin and whether his biggest customers, including China and India, will play along.

The Group of Seven wealthy nations, the European Union and Australia agreed to a maximum limit of $60 per barrel on seaborne Russian oil. Those countries still buying it must pay that price or less, or will be deprived of access to key services supplied by firms in those countries. Those include the best insurance against risks such as collisions and spills, and the European-based tanker fleet including ships owned in Greece and Cyprus. Around 95% of the world’s oil tankers are covered through the International Group of Protection & Indemnity Clubs in London, backed up by Europe-based reinsurance services.