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US EU sanctions against Russia failed to have desired effect

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Gazprom's plan to cut gas deliveries to Europe shows EU countries must agree to reduce their use of Russian gas this winter, a Czech minister, whose country holds the EU presidency, said on July 26, 2022. (Photo by John MACDOUGALL / AFP)

The US and EU sanctions against Russia have failed to have the desired effect so the US is now trying to limit the profitability of Russian oil sales by putting a price cap on it. 

As the crisis in Ukraine lingers on, the United States and its allies appear to have run out of measures to halt Russia. Collectively they have imposed every imaginable form of sanctions on Moscow; the Russian energy, banking and financial sectors, have all been targeted by the west.

But the punitive measures do not appear to have had the intended results; therefore, the United States is now proposing the idea of putting a price cap on oil procured from Russia.

Yeah, I mean, this is more suicidal stuff from the west. I mean, one thing which the Western centric, this US centric, European centric, view of themselves as being indispensable parts of the world I think is the main problem here, because they view themselves as the center of the universe, so to speak, in everything; in politics, economics, etc.

However, they fail to understand that the world is rapidly changing.

Greg Simons, Author and Researcher

The west is trying to limit the price of Russian oil in order to deprive the country of the money it needs to run the war. The goal is said to be to set the price at a level that covers the marginal cost of production so that Russia would be encouraged to keep producing oil.

The idea, which was first proposed by Washington, was agreed upon at the G7 summit in June 2022.

Western countries plan to allow only raw materials and oil products whose value does not exceed the price cap.

In reaction to the proposition Russia has declared that it would not export oil to the world market should a price cap be imposed.

If these prices, which they are talking about, are lower than the cost for oil production, Naturally, Russia will not ensure the supply of its oil to the world market, which means that we simply will not work at a negative profit.

Alexander Novak, Deputy Prime Minister, Russia

It's not yet clear whether Western nations have the capability to implement such a plan but there are already warnings that the scheme may actually backfire.

The Russian President says the price cap would further propel global oil prices upwards and Security Council Deputy Chairman, Dmitry Medvedev, warned that oil would end up being traded at between 300 to 400 US dollars per barrel if the West goes through with the plan.

The European markets and the US markets are not the prime markets for Russian energy supplies. The prime markets are now Asia, and so, they are out of step with what is happening in the world.

And what this will do, will exacerbate, as you noted, an already rather tenuous energy crisis which is caused by, on the one hand, shortages of energy supplies and, on the other hand, costs of the energy supplies.

Because ... who's gonna sell it to the west under the production cost? No one especially when the West treats them the way that they are treating them. So I mean, it's going to be another shot in the foot for the US and its vassal and client states.

Greg Simons, Author and Researcher

Some analysts are predicting that the scenario would be catastrophic for the US and the other group of seven countries.

Market analysts have predicted that China and India, two key players in the Asia region, probably will not cooperate with the price cap.

The setting of various sanctions on Russia has already failed to deprive the country of its revenues; they have actually increased the money Moscow makes from energy exports. Oil prices climbed to 14 year record highs shortly after the war began in February.

It is (an) incredibly self destructive and also delusional kind of strategy run by the US, which is going to only accelerate this global transformation away from this unipolar order towards a multipolar order.

Greg Simons, Author and Researcher

Oil remains above 100 US dollars per barrel. The US tried to fix prices for oil, in the 1970s, and the UK tried to set the foreign exchange prices, in the 80s; both attempts failed. History shows that such attempts inevitably end in failure and the prices skyrocket.


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