Russian oil price cap has largely failed, new report finds

But that’s far less than those who designed the rules had hoped; moreover, the impact was felt most intensely in the first half of 2023 before beginning to fade. Russian oil now consistently sells for more than the $60 limit.

“The impact of the price cap has been limited due to inadequate monitoring and enforcement,” said Isaac Levi, who leads CREA’s work on Europe and Russia, with Western nations failing to crack down on sanctions loopholes. 

The shortfall is partly due to traders simply ignoring the price ceiling, the report states, and Russian oil is selling for roughly $70 a barrel. Around 48 percent of Russian oil cargoes were carried on tankers owned or insured in G7 and EU countries, the researchers found; in theory, the price cap should apply to these vessels, which comprise the vast majority of the global fleet — but in practice, few operators have been targeted.

A “refining loophole” has also undermined Western efforts. Countries like India are buying huge volumes of Russian crude on the cheap, processing it and then selling it to anyone who wants it, without restrictions. That means European consumers could unknowingly be using petrol, diesel and jet fuel produced from Russian crude, bankrolling Moscow’s armed forces at the same time.

The data support this suspicion. New Delhi increased Russian oil imports by 134 percent over the past year, accounting for almost half of Russia’s seaborne crude trade; Indian exports of fuel products to the EU have skyrocketed at the same time. While technically not a breach of EU sanctions, Ukraine has called for Brussels to ban these third-party sales.

Only a handful of individuals have been charged by Western governments for failing to adhere to the rules, and investigations into alleged wrongdoing are rare. Meanwhile, Russia has openly flouted the ban, while a shadow fleet of aging tankers contrives to obscure the true origin of its supplies.

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