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A year since the launch of the G-7 price cap on Russian oil, the measure has managed to curb some of the country’s export revenues but has “failed to live up to its potential,” according to a new report issued Tuesday by the Centre for Research on Energy and Clean Air.
The oil price cap has cut Russia’s oil export profits by 14%, or nearly $37B, but most of the reductions were concentrated in the first half of the year, leaving the impact “far short of what could have been achieved,” the report said, as “a failure to enforce, strengthen and consistently monitor the price cap has allowed Russia to undo the impact in the second half of the year.”
The report recommended cutting the capped price in half to just $30/bbl and imposing stronger penalties on violators, such as a 90-day ban on using Western maritime services.
U.S. and European Union leaders are considering tougher enforcement of the cap, and the U.S. recently has sanctioned some vessels and their owners for violations.
Crude oil futures posted their lowest settlements in five months on Tuesday, with front-month Nymex crude (CL1:COM) for January delivery closing -1% to $72.32/bbl and front-month February Brent crude (CO1:COM) also ending -1% to $77.20/bbl, the fourth straight daily decline for both benchmarks.
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