The American consumer presents a significant obstacle as the Biden administration considers escalating sanctions against Russia. This is in response to its invasion of Ukraine.
U.S. drivers are embarking on summer vacations with gasoline prices averaging more than $5 a gallon. Rising oil and natural gas prices are helping to boost inflation driving up prices for food, electricity and housing. Tougher sanctions on Russia, among the world’s biggest oil and gas suppliers, would likely only make that worse.
The United States and Europe have already imposed a raft of measures targeting Russia’s oil exports. The lifeblood of its economy and its war machine, including export controls, a U.S. ban on Russian energy imports. But the Biden administration is also mulling so-called secondary sanction to ramp up the pressure.
Western sanctions are expected to steadily cut into Russia’s crude exports next year, according to the International Energy Agency (IEA). But so far Russia has been able to find new buyers by discounting its prices. India, for example, last month nearly tripled its Russian crude purchases, while China has also picked up more Russian barrels.
And in May, Russia’s oil revenues rose as higher global prices and steady crude exports outweighed those discounts.
PRICE CAP MANIPULATION RISK
Besides price caps, the United States may also consider sanctions on entities that provide insurance or services to Russian cargoes, where transactions exceed a set price per barrel. But enforcement of such measures would take time and resources.
-Reuters.
