Russia's Tricks Blocked... G7 Strengthens 'Oil Price Cap'

US Treasury Department "Implementation of Phase 2 Price Cap"
Mandatory Submission of Shipping and Unloading Reports for Russian Crude Oil

The Group of Seven (G7) major countries, including the United States, are strengthening regulations to prevent Russia from evading the 'crude oil price cap.' This move aims to block Russia from selling crude oil at high prices by exploiting loopholes in Western sanctions, thereby tightening the financial lifeline of Russia, which invaded Ukraine.

According to major foreign media on the 20th (local time), companies transporting Russian crude oil will now be required to submit declarations proving compliance with the G7 price cap when loading and unloading crude oil. A U.S. Treasury official stated, "We are considering implementing the second phase of the price cap" and added, "The U.S. is pushing to shift toward more aggressive enforcement."

Currently, the West, including the G7, enforces a price cap that limits the trading price of Russian crude oil to below $60 per barrel and prohibits financial services such as insurance for crude oil sold above this price. Under the newly introduced regulations, if the sale price of Russian crude oil includes additional costs such as insurance, transportation, export permits, and packaging, insurers and others may request detailed pricing information. This measure aims to prevent Russia from effectively selling crude oil above $60 by setting the crude oil price below $60 and inflating ancillary costs like insurance and transportation fees.

According to foreign media, as of August, 75% of Russian crude oil transactions were sold above $60 without using Western insurance services. This represents a 50% increase compared to the spring. This is the result of Russia using a 'shadow fleet' that trades its crude oil independently of Western sanctions by avoiding transactions with global mainstream refiners and insurers, thereby neutralizing the G7 price cap. However, 25% of Russian crude oil transactions still fall within the scope of sanctions, and the new measures aim to enhance the effectiveness of these sanctions.

Benjamin Hilgenstock, a professor at Kyiv School of Economics (KSE) in Ukraine, said, "Insurers can now actually verify whether their clients violated sanctions each time they transport crude oil," adding, "This is an encouraging development, and enforcement agencies will potentially find it much easier to verify sanction violations going forward."

Meanwhile, the U.S. Treasury Department sanctioned companies that violated the Russian crude oil price cap on the same day. Two companies based in Hong Kong and one company in the United Arab Emirates (UAE) were added to the sanctions list. According to the Treasury, since mid-October, enforcement of the price cap has intensified, resulting in an increase in the discount on Russian crude oil compared to market prices from $13 to $18.

This content was produced with the assistance of AI translation services.