The Russian oil debacle

Excerpt

The looming Russian oil price “cap” has all the hallmarks of a historic debacle in the making. For months, the United States and the G-7 have haggled over a complex plan to constrain the money that the Kremlin makes from some of its oil exports. With a looming deadline to loosen oil sanctions just days away, policymakers should dump the plan — as it will do little to hasten an end to the war in Ukraine.

The problem is money. Despite Russian President Vladimir Putin’s brutal war against Ukraine and subsequent Western sanctions on his regime, Russia is swimming in petrol dollars. By the end of the year, the Russian Economy Ministry estimates that the country will have made a record $338 billion from its energy exports. This money supports the Russian economy, buoys its current account, and – less directly – helps to finance Putin’s war against Ukraine.

Peter B. Doran is an Adjunct Senior Fellow at the Foundation for the Defense of Democracies (FDD). Follow him on Twitter @PeterBDoran. Follow FDD on Twitter @FDD. FDD is a Washington, DC-based nonpartisan research institute focused on national security and foreign policy.