Why It’s Harder Now to Control Russian Oil Prices?
According to G7 officials, the G7 leaders have decided to investigate potential price limitations on Russian gas and oil. This way they will reduce Moscow’s capacity to finance its invasion of Ukraine.
The officials, who include U.S. Treasury Secretary Janet Yellen, claim that the action will restrict the price that Russia gets for energy. It will also preserve supplies for Western customers. To enable Iraq to sell oil in return for food and medicine, the United Nations devised a similarly comparable system as part of its oil-for-food initiative in 1995.
Will G7 Decision Move the Market?
The initiative came from the administration of U.S. President Bill Clinton to address the humanitarian needs of common Iraqis while preventing Saddam Hussein’s regime from enhancing its military prowess. Oil purchasers made payments into an escrow account managed by the bank BNP Paribas (OTC: BNPQY). The money went to U.N. activities in Iraq and war reparations to Kuwait. Iraq could utilize any leftover monies to buy controlled goods. There was extensive corruption and misuse in the scheme.
The Unified Nations is indecisive regarding Russia’s invasion of Ukraine, which Russia refers to as a special military operation. In contrast, the organization was united in opposition to Saddam Hussein’s administration.
Thirty-five nations have chosen not to criticize Russia, including China, India, and Pakistan. As Europe reduced imports, China and India rose to prominence as the largest consumers of Russian oil at steep discounts. To ensure that Russia’s revenues are decreased. At the same time, it continues production. Western authorities claim they want to promote sales of Russian oil at prices slightly over production costs.
As a result of worldwide price increases that have negated the effects of sanctions, Russia now makes more money than it did before the invasion started on February 24. According to Tamas Varga of oil trader PVM, the price limit concept is proof that outright restrictions on Russian oil have been ineffective since Russian profits have soared. However, it is difficult to establish a buyers’ cartel to deprive Russia of petrodollars while reducing inflationary pressure brought on by oil prices.
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