| RUSSIAN OIL EMBARGO: UNCHARTERED WATERS |
| Efforts
by the West to curb Russian oil flows and the money Moscow receives
from them will be put to the test this week. Beginning Monday, a
European embargo of Russian seaborne crude imports takes effect. Another
set of sanctions will prohibit G7-linked firms from providing
shipping-related services to vessels carrying Russian oil. Frantic negotiations late last week saw EU nations agree to set the price cap at $60. A set of countries including Baltic states and Poland pushed for a much lower price, noting the $60 level is higher than what Russia received for its oil without the cap in place. Europe’s embargo is the greatest intervention in the flow of oil globally in decades and no one knows exactly what will happen. Market players including refinery buyers, traders and those in the shipping industry are skeptical that the far-reaching regulations can be implemented effectively. Politicians backing the effort admit it won’t be perfect, but say any reduction in Moscow’s oil revenues is a win for the West. The crude oil embargo is in some ways a dry run for what looks like an even greater test on Feb. 5, when a similar embargo of Russian seaborne oil products takes effect. Europe has made less progress replacing products like Russian diesel and tight global markets could make finding replacements challenging and expensive. |