“G7 Aims to Hurt Russia with Price Cap on Oil Exports”

We are taking the liberty of hoisting the title of the Financial Times story on this new-improved-but-still-as-delusional West-is-gonna-punch-Russia-in-the-nose-but-good sanctions scheme. Quite honestly, I thought surely someone would put this one out of its misery. But it seems there is never an idea so bad that it won’t be put into practice.

So the US and EU are really mad that their sanctions have backfired. They are paying even more for oil and gas. They are even madder that Russia structures its taxes so they come mainly from foreign oil sales, so that the Russian government is awash with receipts.1

The EU and US making all kinds of noises that they will shellack Russia by going cold turkey on Russian oil and gas. But that’s proven to be sheer bluster. The US said it was going to embargo Russian oil but quietly backed away from that idea.2 Europe can’t replace Russian gas by this winter; it was going to fake its way to that end by maxing out on storage by the fall and then pretending that getting through the winter on previously-purchased Russian gas was the same as not getting through the winter with Russian gas.

Similarly, it took quite a while to conclude the sixth EU sanctions package, the centerpiece of which was a Russia oil embargo. Hungary resisted fiercely because all its oil from Russia is via pipeline, so it can’t finesse its origin, unlike oil carried by tanker. So the compromise, agreed at the end of May, was a “partial ban’, supposedly 2/3 immediately via banning all oil via tankers, and 90% by year end, with the only exception as of then being pipeline gas delivered through the southern segment of the Druzhba pipeline.

Maybe the EU hoped the imposition of the Russian oil embargo would moderate oil prices. It didn’t. The decline that began on June 9 was due to global growth fears. Oil prices kept trending up during and shortly after the latest EU sanctions were negotiated. From Trading Economics:

Many commentators believe Russian oil is getting to Europe via cutouts, meaning with markups, both crude oil and refined products. India is regularly described as a hub.

So the West has not effectively punished Russia and still is paying through the nose for energy. So what now? The “Just say no” plan! We’ll “Just say no” to those high prices!

It appears that no one in the G7 got the memo that “Just say no” means going without, which as we can see, the West is willing to do only optically. Avoiding being seen with your favorite guy and then shagging him in a closet doesn’t work.

From the Financial Times:

G7 leaders meeting for a summit in the Bavarian Alps are seeking a deal to impose a “price cap” on Russian oil as the group works to curb Moscow’s ability to finance its war in Ukraine…

They hope a cap will limit the benefits of the soaring price of crude to the Kremlin war machine while cushioning the impact of higher energy prices on western economies.

The proposal has been strongly promoted by the US and recent comments by German officials suggested Berlin was also coming around to the idea.

Officials said that Mario Draghi, Italy’s prime minister, told fellow G7 leaders that energy price caps were needed because “we must reduce the amount of money going to Russia and get rid of one of the main causes of inflation”.

On Monday, the caps will be debated by a broader group when the leaders of Germany, the US, UK, France, Italy, Japan and Canada are joined by “partner” countries invited to the summit. These include India, which has become a big buyer of discounted Russian oil since the invasion of Ukraine, as well as Argentina, South Africa, Senegal and Indonesia.

I can’t imagine India will go along. India has pointedly resisted Western pressures to join in the “punish Russia” enterprise. Russia also just agreed to allow major Indian retailers to open stores in Russia. And the global South has also been very much put off by the open display of racism and colonial attitudes. If the G7 was offering important inducements like food shipments, that might be enough to turn them, but Russia is more likely to be a key provider of needed commodities than the G7. So why are they supposed to go along? Because the West wants their help?

Charitably assuming this deal gets done, it can go one of two ways. One is that it’s a damp squib, except for Russia stopping deliveries of pipeline oil to Europe, assuming they are on a floating rather than fixed price contract. That would hurt Hungary, which has made the mistake of trying to be sane (i.e., maybe the real point is to punish Hungary). Since pretty much no other oil is supposedly going to Europe, how can oil that it theoretically not (much) arriving be subject to price caps?

Similarly, according to the EIA, the US is not getting any oil from Russia:

The second possibility is that Russia would not sell oil to anyone who tries this stunt. Recall that the UK is part of the G7 and does not plan to wean itself fully off Russian oil until year end, so they could see their supplies cut off. Again from the pink paper:

Energy executives warned that Russia could cut oil supplies sharply in response to any attempt to impose a price cap or make further cuts to gas exports to Europe.

Russia has been very careful about observing contracts when its counterparties are behaving, so I doubt it would cut gas supplies in response to oil shenanigans. However, Germany is threatening to expropriate Nordstream 2 pipeline assets. Russia’s special retaliatory economic measures, aka countersanctions against people who steal from Russia or Russians, are very broad in their application (as in they can also reach to trade/business partners of the perp). Or it could decide to impose a second round related to the Gazrprom Germania seizure or a host of other asset heists.

Put it another way: the “collective West” has been unsuccessful at waging economic war against Russia, but it’s acting as if more of the same will produce different results. And that is with Russia not even fighting back much on that front (except halting sales of noble gases to unfriendly countries in retaliation for halting sales of chips, a major move that the Western press has almost totally ignored).

The US and its allies seem unable to comprehend that they are no longer in the driver’s seat. So it’s not hard to guess that things will get worse for them before they ever get better.


1 Russia’s economy is not as dependent on energy revenues as you might assume:

The Russian oil and gas industry’s share of the overall GDP is generally in line with the average 15-20 percent estimate for other major oil producers, Ekaterina Grushevenko, expert at the Skolkovo energy center in Russia, told RBC.

For example, the share of oil and gas makes 8 percent of U.S. GDP, a massive 50 percent of Saudi GDP, 14 percent of Norway’s GDP, 13.3 percent of Kazakhstan’s GDP, 30 percent of the GDP of the United Arab Emirates (UAE), and less than 10 percent in Canada, according to the expert.

2 With all the other sanctions on Russia, such as on tankers and on insurance on cargoes written by Western firms, it’s likely that no tankers are delivering oil from Russia to the US. But the lack of a formal embargo means oil sold out of storage or otherwise laundered is almost surely still being supplied.

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  1. Lex

    I look forward to the next time these nations wax poetic about the free market. But I’m currently enjoying the inflated sense of self importance of the group of 7 Karens who desperately demand to speak to the manager about the situation. Their insistence on special treatment is comical.

    1. digi_owl

      Meh, it has only been about “free markets” when it allowed western companies to exploit the global south.

      1. Irrational

        Second both of your comments.
        Quite hilarious that these “free market” proponents do not understand that a price cap means quantity supplied goes to zero as there are other customers out there!

      2. drumlin woodchuckles

        Or dismantle unionized industry everywhere throughout the United States and ship it all to China.
        That’s about “free markets” too.

  2. NN Cassandra

    Yet again I have to wonder what “to curb Moscow’s ability to finance its war in Ukraine” is supposed to mean?

    – Russia is “financing” its war with roubles, they aren’t paying dollars to those people who manufacture tanks and bullets.
    – Russian is running trade surplus, they are currently drowning in dollars and euros. G7 would need to slash the price of oil a lot to turn that into deficits. (Incidentally there is the interesting question on what price the West will settle, I’ve seen numbers like fifty or seventy dollars, but if you think you can dictate your oil supplier’s price, why not go with something like ten or even five? And free pony on top of each barrel?)
    – Dollars are just money, the important thing is what you can buy with them. Russia is currently supposed to be under heavy sanctions, especially when it comes to military supply chains, which would imply Putin can’t “finance” the war with dollars even if he has them, because he can’t exchange them for tanks and bullets.

    Also I wonder what the other major oil producers think about this idea. Seems they would not be very supportive of the precedent that West can on a whim dictate how much money they will receive for oil exports and whenever their economies will crash instantly or continue to run for a time.

    1. Objective Ace

      Seems they would not be very supportive of the precedent that West can on a whim dictate how much money they will receive for oil exports

      Thats kind of already the reality. If there’s less demand for oil, the price consumers/industry/countries are willing to pay goes down. It doesnt matter what oil exporters want. The catch is of course that consumers/industry/countries must do with less, which is why this idea is so bizarre. Any econ 101 student can tell you what happens when the price you are offering for a good decreases

  3. John

    All animals (nations) are equal, but some are more equal than others.

    or Bugs Bunny to the G-7, ” What a maroon.”

    1. SteveB

      The Bugs Bunny analogy came to my mind as well but I was thinking in terms of the west being like Elmer Fudd hunting wabbits as his shotgun went in one hole and came out another shooting his own butt.

  4. Colonel Smithers

    Thank you, Yves.

    The left should welcome such a price cap and then say let’s apply such caps to medicines and health care.

    1. Kolyn

      I like the idea of price caps for important & necessary goods – food, energy, housing etc
      But it seems to me you can really only apply price caps to commodities if you a) control production of them or b) if you’re the monopsony purchaser, neither of which apply to the West in the global oil market.
      Group of 7 Karen’s indeed. Are they really this clueless, it’s actually getting embarrassing

  5. DJG, Reality Czar

    As notorious putinophile Alessandro Orsini recently noted in a column (that called into question the competence of Western leaders), the leaders of Anglo-America and the EU want to have the benefits of Russian oil, Russian grain, and Russian minerals at good prices while, at the same time, threatening Russia whenever it is convenient for them to do so.

    And this new plan is thoroughly hare-brained (sorry, esteemed hares): Let’s say we take these free-market warriors to a restaurant. Let’s call it Russian Blinis Galore. There is much “demand” for blinis. But the free-market warriors decide that inflationary blinis should go for only $1 USD a pop because the restaurant is making “too much” money.

    The proprietor, the Evil Vladimira Vladimirovna, says $3 USD a blin, take it or leave it.

    So how is this oil-price-fixing scheme, which seems to have originated in a U.S. high-school clique, going to work out?

  6. Chris

    So what?
    Everyone should just keep paying for Russian oil at any price and just pretend that nothing is happening?

    1. Yves Smith Post author

      I don’t like sounding like I am coming down on you, but your premise is that buyers and the EU have leverage. They don’t.

      Even with oil retreating a bit over recession worries, it was trading in the $80 to $90 a barrel range before the sanctions and mainly in the the $110 and higher range since then, and that is despite the depressing effect of China Covid lockdowns lowering demand. Did you miss that oil prices rose while the protracted fight over the EU oil ban was on?

      Oil is a globally traded commodity. There are some gradations of price based on the type of oil (light sweet v. heavy sour v. Russia’s medium heavy Urals crude) but the prices generally move up and down together. The Urals crude is particularly important to Europe due to it being very well suited to refining into diesel and home heating fuel.

      The record of buyer cartels in setting prices is even worse than for seller cartels, absent specific transactions with collusion (the classic example, which BTW is criminal in the US, is a bunch of buyers agreeing not to bid against each other, having one party bid at an auction, and the hidden collaborators then splitting the lot). Oil is not a market where buyers bid save when entering into fixed price contracts, which is not the case here. They are price takers.

      Russia has made it abundantly clear it is not going to accommodate “unfriendly countries”.

      If the West wants cheaper oil, it needs to drop the energy sanctions. All of them, the tanker sanctions, the insurance sanctions, etc. Anything else is intellectual masturbation.

      The West can help its people or punish them in a futile effort to punish Russia. Those are the choices.

      1. Chris

        This has been profoundly confused.
        You’ve thoroughly explained the circumstances, but provided no alternative.
        How exactly, in your own words, is one government supposed to “help its people?”

        To complicate it, for the most part, “The People” would also like to do what they can to punish Russia and uphold “Western values.”
        And if not now, they will have wanted to, after a Russian victory.

        It sounds like a double bind, which was Russia’s strategic intention.

        1. Yves Smith Post author

          No, with all due respect, you are “profoundly confused”. You are not willing to accept that the Russia sanctions backfired and are hurting the West far more than Russia, and the disparity will only increase.

          Russia is recovering with surprising speed. Its seeing price deflation in some goods categories already due to the success of import substitution. It is cutting deals with Turkey and India to replace non-strategically important goods formerly sourced from Europe like buttons, which makes Turkey and India happy. It’s cut its estimates of 2022 GDP decline and Russia has a reputation for being as accurate as they can be.

          By contrast, the sanctions blowback costs are set to increase for the West, particularly Europe. Energy costs and shortages will rise. Unless the EU can get more nuclear power back on line, it faces burning particularly dirty coal and still likely having lots of people die of hypothermia. Industry will be hit even worse since home heating is being given first priority. Look at links for 6/28 with major German companies already shutting some operations, in the summer. Imagine what it will be like by the winter. This means job losses, potentially permanent destruction of productive capacity, and a deep recession or even depression. If things get bad enough, you could see bank failure in Italy (very dependent on Russian energy) and/or of the ever fragile Deutsche Bank. Either one has the potential to be a systemic event for Europe.

          The West needs to drop the Russia sanctions for its economic survival. But it won’t because ego.

          1. Chris

            You’ve still completely avoided the question, and continued to cloud the issue with wild tangents, while doubling down on how oil is absolute.

            Please in concrete terms provide alternatives, or at least address the double bind.
            It’s rather easy to take potshots when both options are bad, but what else should they do?

            Last I checked, reducing oil consumption was what we needed for the good of the ecology.

            1. Yves Smith Post author

              Your demand is an assignment, which is a violation of house rules.

              I have not avoided the question. It’s you who are refusing to accept that there are no good alternatives. If you want a happy ending, watch a Disney movie.

              If you think there actually is another alternative, the onus is on YOU to provide it. Instead, you keep whinging that I must be wrong when you have failed to provide counter-evidence that disproves my reasoning or supply an option that would demonstrate I was incorrect.

              I told you what has to be done, which is drop the sanctions. You refuse to accept that. I already told you that unless Europe can get enough nuclear power on line by winter (which BTW will not solve diesel shortages already underway, that we’ve written about at length), many EU countries will have to burn even dirtier coal than the Russian coal they are nixing and burn firewood and this may not be enough to avert widespread cold in homes and restricted power to businesses. The Wall Street Journal reported yesterday that BASF is already considering shutting the largest chemical complex in the world, with 200 plants, in Germany over energy shortages. German vice chancellor and energy minister Habeck exhorting citizens to shower only every other day and take five minute showers NOW in the summer is an admission that they anticipate the energy shortfall to be serious.

              Poland is already advising citizens to gather kindling but not bigger branches, which is a sign that they are worried now, in the summer, that trees will be harvested illegally.

              The EU can’t substantially reduce its reliance on oil and gas in six months, but that’s the level of remedy you seem to think can happen out of thin air.

              I trust you will find your happiness elsewhere on the Internet.

              1. lawrence silber

                people have a hard time understanding there are no good choices, just less bad choices. Another words stick with harm reduction. Unfortunately Americans live in a fantasy bubble that often excludes us being stupid hypocrites. We rightfully condemn theocracy’s, but we aint much different. But God is it fun reading your pointed comments.

                1. Polar Socialist

                  There was, in 1990-91, the option of Ukraine becoming a federation allowing all it’s citizens to find happiness in their own way and becoming a functional link between EU and Russia, thus creating a global powerhouse and becoming quite wealthy in the process.

                  I don’t think that would have been a bad choice for anyone involved. Heck, even implementation of Minsk II would have been better than this – although there still would be the rampant corruption in Ukraine and idiotic sanctions separating EU and Russia due to Crimea wanting to be what it always was.

  7. Louis Fyne

    If we assume that “war is politics by other means”….these lame sanctions are all that the West has as the US/NATO cannot defeat Russia using purely conventional military power, as the West’s military has atrophied from bullying minor nations since Serbia in the 90’s.

    It is a reasonable presumption (that could be confirmed by any decent investigative journalist) that:

    1. to fight Russia, NATO has to push Russia out of Ukraine (good luck w/that on Russia’s doorstep, ask the French or Germans how easy that is);
    2. the US does not have the ammunition to fight Russia for a prolonged period of time;
    3. US weapons systems sent to Ukraine have been dogged by Ukrainian allegations that those weapons systems are unreliable and/or lack parts;
    4. US weapons systems such as the F-35 are have a baseline of being operational only 75% of the time even under perfect peacetime conditions;
    5. US-NATO logistics centers in Germany and UK will be among the first things destroyed in any war.

    1. The Rev Kev

      Your comment reminded me of a short video I saw today of Russian weapon production. Nothing fancy but a good reminder that the Russians have the industrial depth to keep on pumping out weapons and ammo for years at a time whereas the past three months have depleted western weapons stocks and which will take years to replenish. So just-in-time weapons production doesn’t work. Who knew?-

      https://www.youtube.com/watch?v=36TVcYxSVzY (41 secs)

    2. Polar Socialist

      the F-35 are have a baseline of being operational only 75% of the time

      “Operational” means it can take off and land. The latest number for “mission capable” I’ve seen was closer to 35%, meaning only one in three at any given time can execute any given mission.

      Maybe we should also modify the “perfect peacetime conditions” into just peacetime conditions, since the backlog of spares is pretty much opposite of perfect.

    3. David

      As I recall, what he said was that war is the continuation of state policy with the addition of other means. The fact is, that NATO has been shown not to have these means, and thus by definition not be able to use them. If you have a policy which requires military means to underwrite it, and you don’t have these means, then you don’t have a policy.

    4. hk

      You forgot Sweden, whose empire was broken for good at Poltava not far from where battles are taking place today. The 313th anniversary of the battle is coming up soon.

  8. super extra

    This was the puerile level of discourse on this topic when I caught it walking through a room with a tv on yesterday evening while a relative was watching NBC’s evening news: G7 leaders mock shirtless Putin during summit lunch

    Thank you Yves for hosting NC so we can have adult-level discussion on these topics which are so directly impacting our daily lives while these fools do… this.

    1. Yves Smith Post author

      Lordie, they have to recycle old crap from 2009? I am told Russians show more skin in the summer than non-beachy Westerners due to the desire to get as much sun exposure as possible for Vitamin D. So I understand this is a cultural thing.

      And I recall a beach shot of Bush the Senior where he showed off spectacular legs.

      1. Neil Carey

        Even worse, Von der Leyen joining in with the ‘banter’ just as Johnson’s government is bringing forward legislation to abrogate an international treaty, the N.I Protocol.

    2. Ignacio

      The problem will come when at some point, if certain limits are reached or surpassed, we realise they cannot do any better.

      1. super extra

        yes, I’ve spent a lot of time since the end of Febrary wondering how they’re going to try to pivot away from their failure. I think by March I was commenting here that the most likely outcome seemed like they would attempt to do a “digital iron curtain” to hide the reality of the rise of the multipolar world to the domestic populations for as long as possible. if the dollar remains strong for a while the charade can probably stay in place for longer than I certainly expected when the full extent of the paper tigerness of NATO became clear to me. A lot really does depend on the outcome of the events of the summer…

  9. Tom Stone

    This has passed the point of being merely stupid and has entered the realm of delusion.
    Are they going to offer to buy Russian gold at $35 an ounce next?

      1. Greg

        I’m curious how much Russian gold is used in industry instead of stockpiled. Chip making could be in for a second whammy after the noble gases, for example.

  10. The Rev Kev

    I first heard about this idea a coupla days ago and thought that this is not how a market really works. If they try to implement it and tell the Russians that they will only pay a low price for that oil – probably a break even price or lower (about $45 a barrel) for the Russians – then the Russians will say that those countries have broken their contracts are null and void. This being the case, they can go whistle for their oil. So this probably explains that article that came out a few days ago where it said that Europe should be prepared for the Russians to cut off all oil exports to Europe. If this lunatic scheme goes ahead, this will be precisely what happens.

    I am not sure how it would be enforced. Will some nations that don’t import oil (directly) from Russia be the first to say that they are now doing it? Will insurance be cancelled on any ship carrying oil that is selling above this cap? Maybe the idea is that what they won’t have to pay for oil can go to the Ukraine – or something. There is a suggestion that Russia might have to sell at this capped price as ‘cutting production for an extended period of time could cause irreparable damage to oil fields.’ Of course if it got to that point, the Russians could actually start doing their own sanctions such as demanding Ruble payments on ALL commodities while choking critical exports that the west needs.


    In any case I am going down to the local garage here in my town tomorrow and demand that he sells me a tank full of gas for half price or less, otherwise I will not buy any from him. I’ll report tomorrow how well that scheme works out.

    1. Vandemonian

      ‘cutting production for an extended period of time could cause irreparable damage to oil fields.’

      Unlikely to be much of a problem:

      Sri Lanka is sending two ministers to Russia to negotiate for fuel — one of the necessities the Indian Ocean island nation has almost run out of amid its ongoing economic crisis.


      And Russia could well behave like a good global citizen, and offer the fuel to Sri Lanka at a discount, or with deferred payment.

  11. JTMcPhee

    It would be comical, if the US rulership did not so closely resemble the Israeli Likudnik bosses, who have little left in the way of “projecting power” other than recourse to the use of their nuclear weapons. After pimping up “profitable” war activities hither and yon that are making a few politicians and lots of supranational oligarchs ever more filthy rich. Remember, many of those rulers are Armageddonists who, like the white-shirt-and-black-tie proselytizers, believe it is their sacred Biblical duty to go door to door, selling their religious hegemony visions.

    I can’t find any reporting on who is getting rich out of middleman positions in the get-around-the-sanctions energy trade. Some israelis were involved in moving and selling oil stolen from Syria, but surely there must be other “notional nationals” from Eastern Europe, Lebanon, Greece and other rogue places. There must be successful people in the CIA, which has illicit arms, drugs and currency activity as its stock in trade, who are “making a killing” in this game. And Elenskyy (remember, the guy who “embargoed” the use of the letter Z in his increasingly basket-case domain, outraging the alphabet-sponsored denizens of Sesame Street) is crying for more weapons, better weapons, which he’s run out of men and boys to deploy with, and lots of those weapons are already showing up for sale on the Dark Web and in dark places where “terraists” and insurrectionists who actually mean it do their shopping.

    Nobody looking at who is getting filthy rich off this crap, this end-of-the-worldly arbitrage? Not surprising, given the interests involved. All one occasionally sees is a passing reference to Elenskyy’s $38 million mansion in Miami. There’s got to be more than that bit if grift. Are the Clintons involved?

  12. Ignacio

    In a video of a recent lecture by J. Mearsheimer in Florence he says that none of the rivals here are, for different reasons, wanting to be seen as loosing (obviously Russia is putting substantial meat on the BBQ while the US mainly dollars and military equipment and the EU lots of noises, Powerpoint plans plus pain at the gas stations and other bills) so this will only scale up in the foreseeable future. Hopefully not to the point of nuclear meltdown, one has to pray for once. The most troubling thing is that if one takes a look at the leadership in this side of the equation the panorama is awful comprising a mummy with blinders, Pinnocchios without heart and more or less blonde clowns.

    My point is that if Mearsheimer is correct we will see more escalation like this.

    1. JTMcPhee

      Only problem is how many G7 have nuclear and other WMD weapons. And we have to wonder what was really going on at all those “biolabs,” that wonderfully obscuring euphemism, there in the pre-failed state of Eukraine. Will the Russian MoD ever tell us mopes, in more detail than has been reported so far? Not that “we,” who have no concept of a homeostatic political economy, have any say in what the all-engulfing, pathological amoebae in the War Department and their pseudopodia and organelles are doing with “our” wealth and resources and likely pretermitted futures. And of course there is no plenipotent international body that might force the issue of disclosure and trial and punishment under the Rules-based international order/

      I’m hoping that Lavrov and Putin can eventually, by all the means available to their nation, force all the rest of us to read, learn, inwardly digest and finally behave in accordance with the Charter of the United Nations. Of course it may just be that the Russians have too much faith in “human nature” and that stuff about the arc of history bending toward justice.

      Though I see that a few cities around the US are tendering “reparations” to Melanized persons, funded out of the 3% marijuana tax the city collects. https://abcnews.go.com/US/1st-us-city-fund-reparations-black-residents-making/story?id=76118463 Maybe there’s a profit center in Ancestry dot com for proof that one has some fraction of African DNA so as to claim a part of those funds. Strange world gets stranger every day.

      1. Irrational

        Fully agree with your sentiment in para 1, but I think any Russian investigations/trials would simply be dismissed by our demented politicians as “fake news”. No hope here sadly.

  13. Leroy R

    Having a hard time here getting timely and correct information… didn’t I see (very few) headlines mentioning that Russia can pay its default by using rubles, which is unacceptable in the present scheme of things.
    Russia Slams Default Threat as ‘Farce,’ Pays Interest in Rubles
    Also, what is going on with Russian uranium sales? Another thing the west apparently can’t do without, so let’s keep it on the lowdown, or is this an example of Russia slowly winding up another punch to throw our way? Would this ultimately be as powerful as cutting off oil or gas?
    As somebody mentioned previously, “I’ve got a bad feeling about this…”

      1. Leroy R

        I came across this article (Does Russia Sell Nearly $1 Billion in Uranium to the U.S. a Year?) at WaPo, which mentioned Kazakhstan:
        “Readers may remember a controversy concerning the sale of a Canadian company called Uranium One during the Obama administration to a Russian state-owned company called Rosatom… Uranium One represented just a tiny part of U.S. production. Rosatom was much more interested in the company’s holdings in Kazakhstan, the world’s leading uranium producer. In 2021, Rosatom sold all of its shares in the U.S. subsidiary. In 2020, Canada just barely held its position as the No. 1 supplier of uranium to owners and operators of U.S. civilian nuclear power reactors, just ahead of Kazakhstan, according to the Energy Information Administration. Both countries supplied about 22 percent of the uranium purchased from abroad, while Russia was in third place, with 16 percent.”

  14. Susan the other

    I read two things recently: 1. Russia made it clear they would never sell their oil at a loss, and 2. The majority of Russian oil/gas has already been rerouted to China. And then maybe 3. China has agreed to supply Russia with various manufactured stuff. So why would Russia care at all about what the West is having a temper tantrum over? The multi polar world is coming together out of self interest. But it looks like it took a really foolish oil crisis to make it happen. It will be interesting to see what happens when the big stubborn baby of the West starts to cry next winter and accuses Russia of being inhumane. By that point all of Russia’s new trade networks will preclude having any extra energy to even sell to the EU. Too bad. But it does have its own balance – this restructuring of trading blocks. My guess is that Israel will come to the rescue of the EU – but only for a profit.

    1. Lambert Strether

      > Russia made it clear they would never sell their oil at a loss,

      But that’s nuts. How do they expect us to preserve the rules-based international order if they won’t sell us their oil at a loss?

      1. ChrisPacific

        “Sir, you are a criminal. Kindly sell me that gun you are holding, so I can shoot you with it. I warn you, I will not pay more than ten dollars for it.”

  15. Tom Collins' Moscow Mule

    According to fable, the story line is something like the following, “I’ll huff and I’ll puff and I’ll blow your house down.”

    Only the fable that the geostrategic managers in the West [Washington] seemingly wish to emulate apparently did not fully account for the entire range of various self interested workarounds, the blowback, the unintended consequnces, ect., ect. that actively emerge in dynamic real world scenarios. Slowing down and thinking things through fully, completely, and rationally; while not exciting, might have been a better alternative.

    “At the same time, concerns are growing that India, which has snapped up Russian oil at discounted prices, has the potential to be used as a “back door” for those supplies to enter Europe, the Guardian reported Sunday. . . . . One workaround being used to mask the origin of Russian oil is paying in China’s yuan rather than the US dollar, the standard currency for trade, sources told the newspaper. Alternatively, sellers will exchange Russian oil for goods like gold, food or weapons instead of a currency. . . . While trading Russian oil is not illegal, the practice undermines Western allies’ attempts to hamper Moscow’s efforts to fund its war in Ukraine by squeezing the market for its oil. . . . But Greece, Cyprus, and Malta have doubled the quantity of Russian oil they ship since the war began, and Russian oil products are likely ending up in the US after being refined in India, according to reports. . . . Nirmala Sitharaman, India’s finance minister, defended the huge volumes of Russian oil purchases, saying the government is acting in the interest of the country’s economy, the Wall Street Journal reported Monday.”

    “Oil shippers are hiding Russian cargoes by paying in Chinese yuan, exchanging weapons for crude, and ‘going dark'”


  16. RobertC

    It may seem off-topic but I feel NATO is engaging in the same fantasy as the G7 ‘Systemic challenge’ or worse? NATO members wrangle over how to treat China

    SCHLOSS ELMAU, Germany, June 27 (Reuters) – NATO’s first new strategy concept in a decade will cite China as a concern for the first time but member states remain at odds over how to describe the country with the world’s largest military and its relationship with Russia, NATO diplomats say.

    …NATO officials are racing to complete the new strategic concept in time for the Madrid summit, where the Russian invasion of Ukraine will take centre stage.

    …Regarding NATO’s original mission to counter Russian threats to the West, the official added: “NATO’s area of operation is simply north of the Tropic of Cancer. It has no eastern or western limits. So I think it’s fair that NATO looks at that.”

  17. chuck roast

    Yes, and the complete cartelization of the US economy is instructive regarding the global north.

  18. Glen

    This would really seem to be the most effective way to negotiate the best possible oil prices for China, India, etc.

    If the G-7 really wants to control oil prices, they need to start with the oil companies in their respective countries, not the country they are at war with.

    The fact that I even have to state this indicates that we have indeed gone Looney Tunes. It would be nice to get the names of the advisors proposing this stuff so we can make sure we keep them away from the “levers of power” or whatever passes for mechanisms of control in America.

    1. Yves Smith Post author

      Who they deal with does not make any difference. Even if the oil company were willing and able to ban “Russian” oil, including miscagenated oil sold out of storage or laundered from India, Russia would treat it as a breach of contract and stop shipping.

      1. Glen

        Just tell American oil companies that the the President is invoking the Defense Production Act of 1950 and set the price of oil being pumped and processed by American oil companies in America. This would have nothing to do with Russian oil.

        Keep buying Russian oil at the contractual price.

        If you really want to control the price of gas at the pumps in America, and if we are really at war, that’s what you do.

        Any thought of controlling the price of Russian oil by the G-7 is delusional.

    2. Procopius

      I remember seeing one person named as having written all the sanctions himself. It was an East Asian name, probably Indian, but I don’t remember it or where I read it — at least two different places. He was pretty clearly not a “high ranking adviser.” The Democrats were captured by a small cult (organized as the Democratic Leadership Council in 198soon after Carter’s defeat, and have been going downhill steadily since 1992. They seem to have really gone over a cliff’s edge since 2016

  19. Matthew G. Saroff

    I thought that the UK was a net exporter of oil as a result of the North Sea fields.

    Could someone update me?

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