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The More Successful the G-7 Oil Price Cap on Russia, the More Risk It Brings

MIN READSep 13, 2022 | 18:03 GMT

The flags of the G-7 countries and the European Union are seen on June 28, 2022, in front of Elmau Castle in southern Germany during this year's G-7 Summit.

The flags of the G-7 countries and the European Union are seen on June 28, 2022, in front of Elmau Castle in southern Germany during this year's G-7 Summit.

(KERSTIN JOENSSON/AFP via Getty Images)

New U.S. guidance on the planned Russian oil price cap could cause a significant escalation in the energy crisis should Moscow decide to restrict oil exports. In guidance published Sept. 9, the U.S. Treasury Department threatened to sanction entities that do not comply with the G-7 price cap and the EU insurance ban when using Western insurers. But it also sought to give safe harbor for insurers and other financial institutions, which are effectively tasked with implementing the price cap, by laying out the steps and documentation needed to comply with the cap. The Treasury Department hopes the guidance will facilitate the transport of Russian oil under the price cap and avoid a crisis where insurers and other financial institutions forgo covering trade involving Russian crude oil. It also hopes the guidance gives the G-7's price cap teeth by showing that the United States is willing to use sanctions against...

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