The plan to put a price cap on Russian oil exports is one that the G7 and the EU have embraced as a way to reduce Russian oil revenues.
- Oct 17, 2022, 5:00 PM CDT
If the oil price cap comes into effect without support from China and India, and if Russia simply cuts off supply, oil prices could climb well above $100.The idea of placing a cap on the price of Russian oil as a means of reducing the country’s oil revenues was first floated by U.S. Treasury Secretary Janet Yellen in the spring.
Oil prices rose on the news but quickly subsided on persistent concerns about a slowdown in global economic growth and the increasing likelihood of several large consumers suffering through a recession. Another fear, and quite justified, is Russia making good on its warning that it could choose to stop selling oil to any country that has implemented a price cap on its oil. This would certainly lead to higher oil prices, with UBS“The Russians were clear: ‘If you force us to accept the price cap, we’re simply not going to deliver crude to you,” the head of UBS Global Wealth Management commodities Dominic Schnider told CNBC.
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