Abstract
In a June 29, 2022, communique, the G7 countries agreed to explore ways to impose a price cap on Russian oil exports. The main mechanism would be a ban on the provision of insurance, logistics and financial services by G7 nations for cargoes sold above the price ceiling. While there are some workarounds, the oil market is overwhelmingly served by G7 service providers, which could create a significant impediment to Russian exports. The G7 accounts for about 30% of the world’s total oil consumption and has called on other countries to join this multilateral effort with the hope of bringing the Russian-Ukraine conflict to a peaceful resolution. While regulating Russian exports would impact all members of the G7 and the rest of the world, the European Union (EU) was by far the largest market for Russian energy before the current crisis, and their energy systems are designed for Russian grades, making it difficult to replace.
