Western allies want to hurt Russia's finances with an oil price cap but keep its supply on the global market to avoid cost spikes. AP explains how the price cap and a European ban on most Russian oil would affect consumers and the global economy.
HOW WOULD OIL KEEP FLOWING TO THE GLOBAL ECONOMY?
that oil prices would spike, Western economies would suffer, and Russia would see increased earnings from whatever oil it can ship in defiance of the embargo.rerouted much of its supply to India, China and other Asian countriesOne purpose of the cap is to provide a legal framework “to allow the flow of Russian oil to continue and to reduce the windfall revenue for Russia at the same time,” said Claudio Galimberti, a senior vice president of analysis at Rystad Energy.
However, that $50 cap would be still be above Russia’s cost of production of between $30 and $40 per barrel, giving Moscow an incentive to keep selling oil simply to avoid having to cap wells that can be hard to restart.Russian has said it will not observe a cap and will halt deliveries to countries that do.
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