Summary

• G-7's $60 per barrel price cap faces mixed reviews on its effectiveness in pressuring the Kremlin
• EU's ban on refined petroleum imports from Russia might be contributing to a decline in Urals crude prices
• India and China continue to snap up discounted Russian oil, raising questions on the cap's overall impact

Let's chat about how the G-7, the EU, and Australia are dealing with Russian oil. They set a $60 per barrel price cap last year to put the squeeze on Moscow, but now they're having some disagreements on whether it's really making a dent in the Kremlin's pocketbook.

They were supposed to review the cap in mid-March, but some European countries pushed for a revision, which didn't happen. The $60 cap would have probably dropped if they had. Konstantinos Venetis, a senior economist, thinks the cap's tough to enforce and monitor, so policymakers aren't too eager to make changes.

At a European leaders' summit, Estonian Prime Minister Kaja Kallas said the cap was working and urged lowering the price to keep pressuring the Kremlin. But a European Council spokesperson hinted that the next review might not happen until May.

Why the delay? Well, the G-7 thinks the cap is doing its job, and OPEC+ made some surprise production cuts, which raised prices and made it hard to argue for lowering the cap.

The EU also banned Russian refined petroleum imports as part of their sanctions due to the Ukraine invasion. They claim the cap and ban have caused a dip in Urals crude prices, which fell below the $60 cap in early 2023.

TS Lombard's Venetis believes a significant and sustained drop in global oil prices is needed for the cap to be revised next month.

Is the cap working its magic? U.S. Treasury Secretary Janet Yellen said it had a significant negative effect on Russia. But Jacob Kirkegaard from the German Marshall Fund said opinions are split on its effectiveness. While it does hurt Russia's oil revenues, it also weakens Western nations' influence in the insurance space.

Meanwhile, India and China have been snapping up discounted Russian oil, with Russia accounting for a significant portion of their crude imports. So, the cap may be causing some impact, but the jury's still out on how effective it really is. Stay tuned for more updates on this oil-slick situation!
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