Hello Power Up readers,
Sanctions are tricky - tricky to monitor and tricky to enforce. Just look at the raft of sanctions Western governments have imposed on Russia since its full-scale invasion of Ukraine in 2022.
These measures have certainly made life harder for Russia, limiting its access to western drilling technology and capping the price of its crude and products, thereby curtailing its revenue.
But, thus far, sanctions have failed to inflict enough pain on the Kremlin to force its hand in ceasefire negotiations, in large part because the West hasn't wanted to incur any blowback in its own markets. Indeed, the G7 price cap, which took effect in late 2022, was specifically designed to keep oil flowing globally and avoid a price surge.
In the past month, however, things have changed.
First, the United States placed sweeping sanctions on Russia's top two oil companies, Rosneft and Lukoil, which together produce 5% of global crude supplies.
This rattled the oil market, but data suggests Russia has found creative ways to circumvent these measures to continue exporting its oil.
Then, on Friday, Reuters reported that the Group of Seven countries and the European Union are discussing plans to impose a full maritime services ban on Russian oil transportation, restricting Moscow's access to a large pool of tankers.
The plan would definitely ratchet up pressure on Moscow's vital oil industry and exports. But to make it count, G7 countries will need to enforce these measures and be willing to face the possible economic and political consequences. More on this below.
Here are a few more headlines:
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