Biden seeks to cap Russian oil prices amid gas shock fears

At its core, the cap proposal is an attempt to use Western influence over Russian oil shipments to dictate the price Moscow can charge for its oil exports.

The cap plan aims to keep Russian oil in the market, but only if it is heavily discounted. Russia could still ship its oil with the support of the West if that oil is not sold for more than a price set by the cap. Negotiators are scrambling to set that price, which would be high enough to ensure Moscow would still profit from its oil sales, but lower than the price it currently commands, about $30 below the world price.

Insurers and finance companies should join the effort to make this work. It would be the same for many countries outside Europe which would buy oil at a reduced price. But even if some countries refuse to sign, such as China and India, administration officials are confident that a well-designed cap would drive prices down anyway — because no country wants to pay more than what it must for a vital product.

Ideally, officials said, the plan could lower global oil prices by reducing the risk of a future supply disruption, which traders could factor into their decisions.

Some experts doubt the plan will work, saying it is ripe for escape and will still provide Russia with plenty of energy revenue. It’s also possible that a low cap will induce Moscow to refuse to ship oil at a discount, instead paying to cap wells and shut down production.

“It’s another half-measure, instead of making the tough decision to stop buying Russian crude and use secondary sanctions,” said Marshall S. Billingslea, who served as assistant secretary of the Treasury for the terrorist financing in the Trump administration.

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