Keep supply well-oiled – The Economic Times

In its splendid kind, the US-led push by the G7 to impose a worth cap on Russian oil exports would facilitate the stream of Russian crude to the market, holding oil costs decrease than beneath an embargo, whereas stopping Moscow from benefiting from worth inflation brought on by any actual or feared discount in Russian provide. Non-participating international locations shopping for oil above the cap might be denied Western-dominated providers together with insurance coverage, finance, brokering and delivery, together with the Worldwide Group of Safety & Indemnity (P&I) Golf equipment that covers marine legal responsibility for over 90% of world oil delivery….

Let’s assume that the allocation drawback was one way or the other miraculously resolved. Why would present patrons, similar to China and India, take part in a system that provides them a big low cost of, say, 40%, for very restricted volumes – as they’re now competing with all the opposite patrons for non-sanctioned Russian oil – in contrast with the present low cost of some 30% for as a lot oil as they need?

After all, accepting a worth cap would allow the patrons to freely acquire delivery, Western P&I insurance coverage and different providers. However a chook within the hand could also be price two within the bush. China and India might properly require agency quantity ensures earlier than accepting any such proposal.

And whereas the G7 may be tempted to provide these, Russia might not cooperate. In actual fact, Moscow may be very unlikely to cooperate as volatility and uncertainty work for it – leading to increased costs and revenues.

From ‘Russia Oil Worth Cap: A Lesser Evil or Ethical Hazard?’, Vitality Intelligence