The price of Russian crude oil on Wednesday rose above the price cap of $60 per barrel set by the Group of Seven (G-7) nations.
The breach was reported by Argus Media, which provides price assessments and other data to commodity markets. The price was calculated based on the average price quoted by buyers, sellers and brokers who spoke with Argus analysts.
It comes eight months after the G-7 and the European Union introduced the cap, amid sanctions against Moscow for its February 2022 invasion of Ukraine, which prevents Western businesses from providing shipping, insurance and other services from exporting seaborne oil unless it is priced below the limit.
However, China and India have increased their imports of Russian oil during this stretch of time.
A study published Thursday by the Peterson Institute for International Economics found that extensive sanctions to limit Russia’s oil export income have successfully reduced Russia’s export earnings and budget revenues. However, according to the Peterson Institute, the embargo has had a stronger effect than the price cap, in part because the cap’s level is too high and enforcement is lacking.
The study finds that “shadow reserves” available to Russia, as well as price cap violations, have contributed to Russia netting about $50 billion in oil export earnings between January and April.
Peterson senior fellow Elina Ribakova co-authored the study along with Benjamin Hilgenstock of the KSE Institute and Guntram B. Wolff of the German Council on Foreign Relations.
The authors list among their recommendations to address Russia’s oil price breach: adopting more financial sector sanctions, greater communication between governments and financial institutions about sanctions and price caps, and enforcing sanctions on a “strict liability” basis—meaning commercial participants would be liable for sanctions violations.
Ribakova also recommends that additional financial institutions in Russia and third countries be made subject to sanctions.