The International Energy Agency, IEA, has reacted to statement made by the G7 during their meeting this weekend, saying that it does not foresee any significant effect on oil prices from stricter enforcement of the price cap on Russian oil exports as supply will not change meaningfully.
“Any significant changes in the markets as always we will reflect in our analysis, in our reports, but for the time being I don’t see a reason to make a change in our analysis,” IEA head Fatih Birol told Reuters in an interview on the sidelines of the meeting.
The comments followed a statement that the G7 would make an effort to reduce price cap evasion “while avoiding spillover effects and maintaining global energy supply”. How they were going to do this, however, remained unclear.
The G7 agreed last year to impose a price cap on Russian crude oil sold abroad in a bid to reduce Moscow’s revenues and, as it argued, its ability to continue the war in Ukraine.
The price cap was set at $60 and compliance has been relatively easy because most Russian oil has been selling at prices lower than the cap anyway. Still, some oil has been bought for more than $60 per barrel.
The G7 has called the price cap a success, with Russia’s oil revenues dropping steeply since its introduction, although this appears to have had little effect on the course of the war in Ukraine.
There is, however, little that the G7 can do in addition to what it is already doing, which is holding the threat of sanctions over Western shippers and insurers carrying Russian oil bought for more than $60 per barrel.
Earlier this year, when oil prices began to pick up again, insurers sounded the alarm about the price cap, saying there was no way for them to track the value of every cargo from the port of departure to the port of arrival.
“If Russia wants to export its oil and sell it above the price of the price cap, then it’s in the interests of both the Russian exporter and the receiver not to release information as to what the true price of the cargo was,” one insurance executive told Reuters in April.