2 September 2022 by Eggbert Nobakon
Today's news informed us that leaders of the 'G7' nations (a group which likes to think of itself as made up of the world's most economically powerful nations although China (2) and India (5) are not members while Canada (9) and Italy (10) are) have agreed to impose a price cap for purchases of Russian oil in a bid to slash Putin’s energy revenues and ease the global energy crunch.
In a joint statement G7 finance ministers announced the goal was to block the transportation of all Russian oil sold above a certain price. The ministers said the plan would be implemented in line with EU sanctions on Russian oil set to take effect on December 5.
The statement, which notes that all EU nations will have to sign off on any sanctions changes, did not specify a level at which the cap will be set.
The G7 plan, the latest, and likely to be the most ineffectual to date in the US / NATO / EU attempts to punish Russia for its
invasion of Ukraine, would allow buyers of Russian oil under the agreed
cap to continue getting crucial services like financing and insurance
for tankers. Unfortunately the people who dreamed up this idiocy overlook the fact that sipping capacity, trans - ship transfer facilities and insurance are all available from finance centres in Dubai, Singapore, Mumbai, Shanghai, Qatar and Saudi Arabia, all of which are outside the jurisdiction of the USA, NATO and the EU.
European Commission President Ursula von der Leyen doubled down on the EU's shooting itself in the foot, shooting herself in both feet by saying the bloc should impose a price cap on Russian pipeline gas to foil what she described as Putin's attempts to manipulate the energy market.
Former Russian President
Dmitry Medvedev said Moscow would turn off gas supply to Europe if
Brussels pushed ahead with a price cap which aptly illustrates the
desperate mess the western economies have got themselves into.
Recent trade statistics show Russia was selling more than 40% of their
oil to China and India, a lot more than before the war. India and China are then selling it on at an eye watering profit to commodity traders who disguise its origins and sell it into western commodity markets. Thus the price cap will only result in consumers in the nations that have imposed sanctions on Russia paying much more for everything because energy costs have a knock on effect right through the supply chain.
A couple
of days ago Moscow agreed a deal with the Japanese and Hungary, and in
today's papers it's reported that Austria is toying with buying gas from
Russia - and on Russian terms. Putin's regime is odious, but Putin is
playing his hand well.
Sanctions already imposed aren't working, Russia sells oil to China/India and what is now called the global south at reduced rates. There is zero reason for them to follow the 'west'. Indeed, even straight after the invasion, it was clear that most of the world was not following the west's sanctions. Meanwhile EU member states and the UK, USA and Canada, Australia and Japan, thanks to their governments complete mismanagement of the Russia / Ukraine crisis, are already facing three domestic crises, food shortages, energy shortages and an inflationary spiral which is driving millions of families into poverty.
As for the non sanctioning nations, the BRICS bloc (Brazil, Russia, India, China, South Africa,) is set to be made infinitely more powerful by the addition of oil - rich Saudi Arabia. In real time we are witnessing the dividing of the
world into 2 blocks, and I fear that we are in the block that will
become considerably poorer, and won't even succeed in its goal of winning the USA's proxy war with Russia currently being fought in Ukraine.
This price - cap project is an incredibly stupid move by the G7
7 of the wealthiest, whitest countries in the world with a combined population of less than one third of the planet believe they are capable of dictating to the 6 billion or so on the rest of the planet when those G7 nations are dependent on BRICS members for energy, staple foods, raw materials and manufacturing capacity
The unintended consequences of this ill thought - out move are beyond imagination
Over the medium term it’s likely to give impetus to moves already under way by China, Russia, India, Turkey and a number of Middle East and African nations to set up alternative financial structures and governance structures, which will have huge international ramifications led by the USA.
It won’t work out well and predictably so because the people who formulated it obviously do not understand how the business they want to manipulate actually works
The international oil trade does not work by shipping lorry loads of oil overland. Commodity dealers make contracts for quantities of oil at agreed prices. So a million barrels of Russian oil sold to a commodity trader in India, China, Singapore or Dubai need not go anywhere near the country where the buyer is based.
This latest idiocy is just more theatrical posing from clueless western leaders. Had these clowns not embraced green and 'net zero' lunacy over the past decade or two we might not now be in the situation of depending on Russia for energy supplies.
Picture Credit: REUTERS/Hannibal Hanschke/File Photo
The Americans are in cahoots with Zelensky and have really suckered the EU and U.K. into taking the pain over Biden’s proxy war with Russia. This war has made almost all USA energy sources profitable and Biden immediately ordered the frackers to frack despite signing up to net zero.He has also made the US fertiliser industry profitable and filled the order books of the US weapons industry and its supply chain. And his next move is likely to be authorising oil extraction in Alaska's arctic regions.
What is Europe and the U.K. getting in return?
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