Financial Times- How would a G7 price cap on Russian oil would work?
On Friday, finance ministers from Canada, France, Germany, Italy, Japan, the UK and the US gave the go-ahead for such a scheme, declaring that it would “build on and amplify the reach of existing sanctions”.
The success of the proposals will hinge on the readiness of big importers of Russian oil, including India and China, to go along with the scheme. So far, neither country has indicated a willingness to participate. Russia has warned it would retaliate against any country that takes part by withholding shipments of oil.
Like all price caps, it wouldn’t…even if China and India stopped existing. What would work is 1) producing hydrocarbons and 2) more importantly, a strong dollar policy. Powell & co are working on the latter and are gradually vindicating the warning I gave several months ago against going long on commodities especially oil. I digress, but it’s probably too late to sell your property for good money. It’s going to be brutal! Get ready to catch that market bottom sometime next year!
Riddle me this: Do you believe there is no supply crisis for the oil market? Or are you saying that it doesn’t matter cuz you believe CO2 = bad and therefore oil’s use should be immediately restricted even if the cost is individual rights and freedoms?
Price caps?
So the only country that would sell to the US would then be Canada.
With no world price, no other country would sell to the US.
Biden would have to ration gasoline. And we’d see Jimmy Carter era gas lines.
And so the Russians sell to people that don’t give a damn and haven’t heard about the sanctions. They still get to charge whatever they want. So how is this going to work again?
How? Well now, Chrystia NODDINGHEAD “Free”land, is the Finance Minister, and, being a social justice warrior journalism major, that drove Thomson Reuters into the ground, is JUST the “Financial Expert” that drives this policy.
She’s in good company with the other G7 finance poobahs.
All, financially incompetent dimbulbs. Every measure they’ve taken so far has failed SPECTACULARLY and made Russia stronger.
Not incompetent. Just ideologically driven. They know exactly what they’re doing, and they know what they’re doing is not in our best interest, but they don’t care, as long as they meet their interests and their objectives. I can’t emphatically say what those objectives are, but I can reasonably assume that those objectives do not line up with ours.
Look to WEF and the UN , you will find their objectives there , written down in black & white.
Those are their STATED objectives. The real goals are much worse, and too horrifying to contemplate. Those are the objectives that I resist stating publicly for fear of being branded a tin-foil-hat-wearing conspiracy theorist, so I’ll wait until someone else says it first.
” and made Russia stronger”
No it hasn’t. They are in dire economic straits, and they weren’t that well-off to start.
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Isn’t Justin the guy who nixed Canadian sanctions and authorised
repairing the turbines for the Russian oil pipeline?
*
G7…
G6…
G5…
G4…
G3…
G2…
G1…
KABOOM…
They’ve blown themselves to smithereens economically.
Some countries are already doing under the table deals with Russia.
Under-the-table deals with the west = weapons for ISIS and the Mujahadin.
Under-the-table deals with Russia, China and India = cheap cars, electronics and fuel for the people.
Are we the baddies?
When this was first reported unquestioningly in the media, my immediate thoughts were – how would that work?
Has this ever been done before?
How on earth could any entity or group impose a price cap? If Germans are freezing in their houses, and Russians offer a barrel of oil for x dollars, then the Germans will prosecute any company or individual that buys that barrel? Surely the Russians will require the x dollars of payment in advance when their customer is openly declaring a policy that x dollars of payment is illegal. So it’s either pay the money or freeze in the dark. The Germans would prefer to freeze in the dark?
And if the global price of oil is more than x dollars, it will only be illegal to pay Russians that amount? The Russians could simply offload the oil to any middle-man country in the world, regardless of whether China and India buy in.
If the global price of oil is less, then of course nobody would pay more money to the Russians for the same thing, rendering a price cap completely pointless.
This whole idea is hare-brained.
This is brought to you by the same hare-brained officials who brought to their countries the energy shortage. It is the same hare-brained people that somehow believed you can run a modern economy on wind and solar. It is a completely bonkers policy that could never work.
“A senior figure in the Lloyd’s of London market on Friday said insurers would be asking the cargo owners, who typically buy a bulk insurance policy, to commit to complying with the cap. “If you are a company that doesn’t trade in compliance with the cap, you will not be able to buy insurance,” the person said.”
So, if the Russians choose to ship uninsured, we get an uptick in totally-not-CIA tanker piracy?
Well, they could ship uninsured, as you say.
Or such a move could cause the sudden appearance of insurance companies from other countries. As if China and India and almost any country in the world is not capable of providing insurance. All you need is capital and actuaries, both of which could come from the west if they wish.
And as the article indicates, insurers are not privy to the trade deals taking place, and it’s highly unlikely they want to be. They have no desire to police the oil markets. They are not a global police force.
The whole scheme is hare-brained and bound to fail.
It’s amusing to think back to a few years ago when Steve Paikin on TV Ontario was trotting out guest after “expert” guest praising the wisdom and foresightedness of German energy policy.
These prescient geniuses urged Canadians to follow suit. To our shame and regret, we largely did.
Remember Bjorn Lomborg’s calculation?
“Germany’s government wants to spend €40bn over next 4 years to cut CO₂. This will cut global temps by 0.00018°C”. That’s one Centigrade degree per 5,500 years.
What would happen is similar to what happens now with bs policy and excess regulation. A whole industry of ‘bs avoidance and regulatory rule bending’ will spring up, and nothing else will change.
H
My guess is the G7 wizards have suddenly realized winter is coming and it’s going to get cold.
The Hungarians have just cut an energy deal with Vlad. Is this going to be a round-a-bout way to get the product to western Europe? The Chinese and India are buying at fire sale prices. Are they going to sell on the market at world price? Probably. When the Chinese boycott US ag the beans get sold to a third party and the Chinese buy through them.
My guess is in the short term oil is going through the roof. $6/gal in the US. Joeballs Biden is hoping it wont happen before November.
The fix is in.
this is just POLITICAL theater to convince the STUPIDS that they are trying to do something on oil supply problems. They know it won’t/can’t work, butt as Grubber said, they (the Voters) are just too stupid to know ant better.
“a scheme”
who do they think they are, OPEC?
There is a military exercise in eastern Russia every 4 years called “Vostok” drills.
it’s on now for another couple of days, with China, India, Belarus, Mongolia, Tajikistan attending.
Can any of Canada’s ministers find these places on a map, perhaps if tier 2 Canada didn’t hate NATO so much, they’d already know?
NATO has done reports of this and estimated about 75-100k combat troops during the 2018 celebrations.
https://www.rferl.org/a/russia-military-drills-china-india/32013696.html
*one of the investor guys I follow had a photo of “one ounce of German gold” today, and in place of where you’d normally see shiny metal, there was a woodshed of kindling and small wood for recreational type fires to stay warm by this winter.
Was the price cap idea led by the G7 social justice warriors? I doubt Mr. Putin gives it much thought.
2.5 billion people in China / India who would like to drive cars aren’t going to care where their oil comes from, nor their heating supplies of natural gas.
I think the G7 governance is actually insane. We’re all being led by imbeciles. Actual imbeciles.
So, the G7 thinks it can place a price cap on somebody else’s product. Much like the California gangs can place a price cap on retail products, except the rest of the planet isn’t as dumb as the west is.
In times like these, insurance is a loaded gun.
It is the admission of Defeat by the Cabal. Big problem for the EU and the UK.
Their politicians will be scourged and purged from Government.
The EU, UK, USA, Canada represent about 1B people out of earths 8B people. So 7B of those people and their markets are no longer listening to the G7Bullshit.
They are all buying Russian products and Russia is laughing.
Putin just shut off all Nat Gas to the EU perhaps permanently.
They will have to kiss his ass on the court house steps now publicly.
Has anyone see so many morons in power?
Putin has another 7B people to sell his products too. The Euro as a currency will be useless followed by the USD. Trudeau has Canada 9 Trillion in debt, Canada will be broken up when Trudeau has to end Indian Welfare and Quebec and Atlantic Canada Welfare scams and vote buying arrangements. It is over. Bring out the FAT Lady.
Us whiteys seem to have lost the plot. It’s too bad, we were a pretty easy-going kinda people, back in the day. Now the world will get to see some old-school horror. I’m not afraid, but rather a fair bit disappointed. We tried, which is more than can be said for anyone either before or after, ever.
I can see frozen Europeans from my house!
Close the curtains.
I note with humour that after the ‘price cap’ was implemented, Nordstream 1 was shut down due to “oil leaks”. Europeans are scrambling now.
Another Oil for Food scam.
You need unanimous agreement from all 27 EU countries. Good luck with that. The grifters are lining up to cash in.
Clinton hack Janet Yellen is putting the deal together. They will agree on a price that the ruskies will be able to make some money – but not too much…haha. And then there is the grifters cut.
They want to crush Vlad but need his resources so now they are going to do business with him, and force him to sell to them at a deeply discounted price. Bye bye Ukraine.
What planet do these people live on?