A heroic wish list that remains very short on detail
Paul Kelso
Business Correspondent @pkelso The G7 and EU states have already pledged to reduce or reduce imports of Russian oil and gas. The “price ceiling” announced today by G7 finance ministers is an attempt to further choke Moscow’s fossil fuel revenues by targeting the service companies that provide the logistical and administrative architecture of the oil trade. The G7 says service providers will be barred from “allowing maritime transport” of crude oil and petroleum products if they trade above a yet-to-be-determined ceiling. The announcement is not specific about which services, but we can assume that shipping, transport, insurance, finance and trading companies, many of which are based in the EU, US, UK and Switzerland, are being targeted by finance ministers. The aim, according to Chancellor Nadhim Zahawi, is to reduce Moscow’s oil revenue while protecting low- and middle-income countries still dependent on Russian imports and insulating British consumers from future price shocks. This is a heroic wish list, but one that remains theoretical and very short on details. This announcement only signals an “intent to finalize and implement” a plan, and it is unclear how it will be implemented. What is clear is that existing measures to curb dependence on fossil fuels are not hitting the Kremlin’s revenues as hard as expected. Although Russian oil export volumes have fallen, higher world prices caused by the war mean revenues are rising. Research from the Center for Energy and Clean Air shows that revenue rose in July as exports fell 6 percent. And while Western customers are turning their backs, India and China are exacerbating the slack, with Beijing now relying on Moscow for nearly 25 percent of its oil imports. The G7 move is a recognition that so far, Russia’s strategic weaponization of fossil fuels has been a win-win strategy. While European consumers are hit with higher bills, in turn perhaps weakening support for Ukraine, Moscow is still collecting money.
