Treasury Secretary Janet Yellen is still pushing an idea to put a price cap on Russian oil even as it draws more skepticism and warnings that the plan won’t work.
The idea of Yellen’s plan would be to deny financing and insurance on shipments of Russian oil if it’s not being sold at a set price that would limit Moscow’s profits. The New York Times reported on Wednesday that shipping insurers don’t think the plan is enforceable.
Mike Salthouse, the global claims director for a leading global shipping insurer, The North of England P&I Association Limited, said the plan won’t work. “We can ask to see evidence of the price paid, but as an enforcement mechanism, it’s not very effective,” Salthouse said, according to the Times.
“If you have sophisticated state actors wanting to deceive people, it’s very easy to do,” he said. “We’ve said it won’t work. We’ve explained to everybody why.”
Yellen is pushing the price cap over fears that EU sanctions set to take place by the end of the year will send oil prices even higher than they are now. Under the sanctions, the EU will ban the import of Russian oil, with an exemption for Hungary, and European insurers would stop insuring shipments of the commodity.
Russia relies on insurance from the EU and Britain for its oil shipments. There are alternatives, but at least initially, the EU sanctions could slow down the movement of Russian oil enough to cause a significant spike in global prices.
Some analysts think that even if the price cap is successfully implemented, companies will still be extra cautious and avoid doing business involving Russian oil over the fear of being hit with sanctions.
The irony of Yellen’s predicament is that the US pressured the EU to ban and sanction Russian oil, but now it’s clear those measures will backfire on the West.
Besides the issue of enforcement, the price cap plan is doomed to fail because it requires the cooperation of Moscow. A Russian central bank official said Russia would likely respond by not supplying oil to countries that require the cap and could cut production, which could send prices skyrocketing.
Last month, analysts at JPMorgan Chase warned that if Russia responds by cutting oil production, in the worst-case scenario, oil prices could soar to $380 per barrel.
17 thoughts on “US Plan to Cap Russian Oil Price Draws More Skepticism”
The stupidity of US Lawmakers knows no bounds.
Stupidity, and malice
Is the U.S. Government hatred of Russia so strong that they are willing to risk its own economy and the economy of the world for some perceived sanctimony points? What the Heck are they doing? If I didn’t know any better I would think there people in the U.S Government that want a direct military conflict with Russia!
Policy of any country is shaped by individuals. It is not an abstraction. The roots of hate — known as Russophobia— go way back before Catholic-Orthodox split. And it actually started in multicultural Russian region, today called Ukraine. Its spread accross Europe, but remained limited to immigrants.
Russian rulers and clans were closely linked to Norwegian. Viking era is as much Russian as Nordic. Itvwas an era of opening new trade routes at the time Europe was embroigled in wars of Roman empire sucession. Spread of Saint Andrew Christianity from Kiev — where he preached — to Dublin, is well documented. Many old Norwegian churches had St.Andrew cross. Which is to this day the flag of Russian navy, built into the flag of Amsterdam, and became the flad of Scottland, From the Netherlands to Scotlans Fife coast pilgrimage trail to St.Andrews town. Whee until today its museum contains a mention of ancienr Scottish belief of their origin — people called by Greeks Scolotoi, or Skits, that lived in then Kiev Russ. Scotland, Norseland and Russland was connected world. Everything is being done today to eliminate these historic threads from living memory. Similarly, everything is done today to eliminate knowledge of old Prussian language. And for a reason.
Following the split in Christianity, Vatican actively promoted hate towards Orthodox countries and populatiins. But even that did not cause Rusdiophobia as we
know it today. Russia was a monarchy as were most European cultures. Through intermarriage they kept relationships Brittain established in
16th century Moscovy Trading Company, a predecessor to East India Company.
But Britain became an Empire and its interests became global. Which meant — as it means for US today — containing any strong powers. Russia became an enemy by definition. Itvwas amplified by tge old European banking families that hated Russia. Once Brittain became integrated into European banking system in 18century, the imperial and banking interests were indistinguishable. So was Russophobia. It simply crossed Atlantic. It was insignificant until US took the mantle of the empire. Ever since, it grew into fanaticism.
But like in any empire, especially as multiethnic as US — the hatreds and ensuing fanaticism, become policy.
And the events that shaped the creation of Russian state — the Kievan Rus — and the Russian relationship with empires to follow, have over centuries evolved into European rivalries and alliances. But the process of looking at Russia as something non-European and alien, did not take hold until the combined interests of British empire and Europen banking made it a reality. Hitler formalized the untermenchen theory and put it un practice. The end of Russian monarchy damaged what was left of Russia’s European roots. Official history of Europe did the rest. Segregated by a firm wall the East and West.
It all came back today where it started, Where Russian prince Vladimir took Christianity in once obscure town of Kherson.
Here in US we are not just fighting Russia as we know it. Our ethnic diversity allows for a very sectarian influences to be intervowen into national policies. There are many today in decision making pisitions that are obsessed by Russia. And cannot distinguish betwern today. or what happened over 1,000 years ago.
The nature of our economic foundations, soecial interest groups and political system makes it possible to shape our foreign policy into extremes that are blunded to reality. And damaging to our core interests as a nation.
Russophobia goes back to the early 1900’s.The ruling WASP elites in the UK and US feared revolution,socialism,unionism, Wobblies,,and having to share power or pay fair wages. They despised the multi ethnic hordes in Eastern coast slums clamoring for a better life, espousing socialism. The US military had plans to set up machine gun nests in NYC’s lower east side,as if a bunch of desperately poor peddlers and needle workers were some sort of threat. They had no problem with the TSAR or aristocracy. Remember the “Red Raids”.
The most unbelievable aspect of this confrontation is that U.S. & NATO gnomes face war with Russia & China when their militaries are FAR behind & weak from chasing Arabs while Russia & China did stealth, hypersonics & deterrence. When tens or hundred of millions could, likely, would perish. Are the U.S. architects of this Ukraine gambit so callous to even envision this deadly challenge? Will the outcome of this dangerous confrontation be Obama legacy as the peace prize president? Joe Biden , Hillary Clinton, Jeffrey Piatt, Victoria Nuland, the 2014 conspirators who birthed this insane and dangerous confrontation. This is not full spectrum dominance the Neocon dream! Its full spectrum hubris which all to often precedes a great fall.
When you are confronted with this kind of conundrum, the non dogmatic thinker has to contemplate that the underlying assumption could be wrong.
So perhaps the US/NATO did not unleash this war, perhaps the more likely scenario is that Putin exploited the US/Western Afghan debacle to try to take Ukraine while the west were in no shape to do anything?
Or perhaps the US/NATO are not “far behind in military technologies.”
I actually do not believe that they are far behind, not in areas that matter – sure hypersonic missiles, but conventional ones will also make it through so…
But even so the timing of the war was not opportune neither for the West nor for the US alone, while the argument that the Afghan debacle was a golden opportunity for Putin still stands – or do you have some insights as to why this was not likely to be a good time for Russia?
They are not far behind in “technology” but they are far behind in numbers and readiness, the result of long wars consuming vast resources.
Way to go Janet! (NOT)
Maybe it is time for things to backfire, maybe it’s time… Too many arrogant bozos on the bus…
It seems being arrogant bozos is a job requirement.
“Besides the issue of enforcement, the price cap plan is doomed to fail because it requires the cooperation of Moscow.”
Even Jethro Beaudine and his 6th grade education could figure that out. Maybe Yellen should call Jethro.
Yellen’s plan won’t work for the same reason the current sanctions don’t work. It assumes the entire world outside of Russia will cooperate. That just isn’t going to happen.
The Chinese exports to Russia have gone down by nearly 50%, so it would appear that the parts of the rest of the world that counts do cooperate.
Interesting to see the thinking of Yellen shifting U.S. durtywerk onto others. It seems being top hegemony has a way of eliciting magical thinking. Perhaps it would have been better to negotiate the scheme to put U.S. nukes in Ukraine, but Stoltenburg said we are NOT going to change NATO policy for you, thereby closing the door on negotiations. Perhaps Russia should make an alliance with its friends that puts Russian nukes on the borders . We could discuss later who would control then. It sounds like an equitable quid pro quo…!!!!!! Maybe back into Cuba too….?????? I’m sure THATdeal could be done.
There never was a NATO (nor a US) plan to place nukes in Ukraine – that would only have made everyone less safe.
Not even necessary the Russians can place a nuclear armed submarine closer to Washington, London and Paris than they will ever get by placing nukes in the countries of their friends.
Flight time from Cuba is so much longer than that from a submarine just outside Washington – do you still live in the early sixties?
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