Stricter enforcement of price caps will not affect oil supply

Russian-flagged oil tanker Pegas docked in Greece
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The International Energy Agency (IEA) has said that the G7’s decision to counter bypassing Russian energy price caps will not change the supply situation for crude oil and oil products, following the imposition of a $60-per-barrel price cap on Russian sea crude and a price cap on Russian oil products to deprive Moscow of revenue for its invasion of Ukraine. The G7 has vowed to step up efforts to counter cap circumvention. However, the IEA faces no impact on global oil and fuel supplies from increased enforcement of price caps, as per Fatih Birol, Executive Director of the IEA.
The price cap imposed by the G7 achieved two main goals: it did not cause tension in the markets, as Russian oil continued to flow, but reduced Moscow’s revenues, according to Birol. Germany instigated the language change in the communiqué regarding gas investment support, as the European nation has been massively dependent on Russian gas for decades. Alerting climate activists, birol noted that gas investments were a “temporary” fix to address potential market shortfalls as nations sought to decouple from Russian energy. The communiqué did not specify a timeframe for investments in the gas sector, but Birol said that Scholz has repeatedly made it clear that Germany is very interested in achieving the 1.5-degree target.

Tags: Russian oil price cap


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