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In an ideally scripted world for the U.S. and its Western “allies,” the historic sanctions leveled against Russia that they said would restrain Russia’s advance into Ukraine and “ruin the ruble” would have worked in the first rounds after the Ukraine invasion.
That did not happen, and the West is getting more desperate by the day to show evidence of a sputtering Russian economy and cover-up the economic hardships imposed upon its citizens as gas and oil price inflation eats away their incomes.
In summary, the gas cap, which has been heavily promoted by Italian Prime Minister Mario Draghi, would mean European countries would refuse to pay above a certain amount for Russian gas. This price cap would be policed by warning oil tankers that they would face steep penalties if they sell the Russian crude over the fixed amount.
Analysts at SEB, the Swedish bank, said last week that oil prices could jump well over $200 per barrel if the G7 goes through with its plans.
However, for the plan to work, large nations such as India and China for example that are not part of the G7 that are buying Russian oil would have to join the scheme… which they will not.
The Trends Journal has long noted that the Russian economy relies heavily on its energy production and Western leaders have been vexed by Moscow’s ability to absorb these sanctions thanks in large part to a jump in worldwide energy prices and the emergence of a willing market in India, Turkey and China for example. (See “U.K., BRUSSELS BAN INSURANCE ON TANKERS CARRYING RUSSIAN OIL.”)
There are also unanswered questions on how to implement such an ambitious plan.
Schieldrop said countries should be praying that Russian oil exports don’t go down because that would make the price of oil jump to about $200 per barrel.
Olaf Scholz, the German chancellor, seemed sober in his assessment of the viability of the Russian cap and told reporters that “a lot of things” would have to fall into place to make it a reality. He vowed to continue to “drive up the economic and political costs for President Putin and his regime, and keep them high,” according to the Financial Times.
Alexander Novak, Russia’s deputy prime minister, called the plan shortsighted and said any cap on Russian oil would lead to a shortfall on the world market, The Moscow Times reported.
“This is another attempt to interfere in market mechanisms, which can only lead to market imbalance,” he said. “In my opinion, this is a measure directed against them, as it has already happened more than once.”
TRENDPOST: The Trends Journal has reported how Western sanctions have failed to hurt Russia. Novak pointed out that Moscow is now producing about 10 million barrels per day, which was about the level in February.
Biden once said the ruble will be “rubble” after the invasion and was correct for the first few weeks, when it dropped 50 percent against the U.S. dollar.
The Associated Press pointed out that on Wednesday the ruble was 52.9 against the dollar, which has been problematic to some Russian businesses due to export costs.
JPMorgan Chase & Co. analysts warned in a note to clients that oil prices could jump to a “stratospheric” $380 per barrel if Russia cuts its supply in the wake of the price cap, according to Bloomberg. The report said Russia’s economy is doing so well, it can stand to cut 5 million barrels and not be impacted.
The Trends Journal has reported on the ineffectiveness of the massive sanctions put on Russia, and how We the People have paid the price. (See “BIDEN’S ‘HATE RUSSIA’ SANCTIONS CAMPAIGN INTENSIFIES,” “BIDEN BACKTRACKS: SAYS SANCTIONS WERE NEVER MEANT TO DETER RUSSIA FROM INVADING UKRAINE,” “POLISH PRIME MINISTER ADMITS SANCTIONS A BUST” and “UKRAINE WAR ECONOMIC OVERVIEW.”)