Russia is making just as much money from energy exports as it was before it invaded in late February. Meanwhile, inflation is surging globally, adding to political pressure on leaders such as US President Joe Biden, British Prime Minister Boris Johnson and French President Emmanuel Macron.
As leaders from top economies gather in Germany on Sunday for a G7 meeting, they’ll try to reach a consensus on what to do next. Unfortunately, on oil, few good options are available.
Several measures are being discussed, from price caps on Russian energy imports, centralized purchasing by the European Union, insurance bans on ships and targeting countries that continue to buy from Moscow. They all have downsides, and some could push prices even higher — risking popular support for the West’s resolve to punish Putin.
“There are tools available to go harder after Russia, but they come with significant costs directly to consumers in the US and Europe,” said Robert Johnston, an adjunct senior research scholar at the Columbia Center for Global Energy Policy.
Imposing sanctions on countries that continue to scoop up large volumes of Russian crude oil, including China and India, would wreak havoc on global markets that are already under severe strain. And while Treasury Secretary Janet Yellen recently said the United States wants to discuss a cap on the price of Russian oil, such a complex mechanism may not be the fix the West is looking for.
“It distorts the market at a time when the market…
