US Targets Soft Enforcement of Russia Oil Price Cap

The Biden administration plans to increase outreach to western trading houses, ship owners and insurers to remind them of the need to abide by the G7’s $60/b cap on Russian oil, according to Reuters reports.

• The US government intends to use “soft tactics” rather than threats of harsh enforcement, fearing the latter could have a disruptive effect on global oil markets and fuel price spikes.
• Nonetheless, attestations must be kept by companies involved in the trade of Russian oil, affirming the sales price was below the cap. Failure to comply can lead to fines.
• The cap is designed to limit Russian revenues, while ensuring that there is a continuous supply of oil.
• Urals has been trading above the price cap for almost 2 weeks.
• Russia is considering creating a new insurance company to provide coverage to seaborne oil supplies and circumvent the sanctions, according to Tass.