The West has cracked the code on how to roll back Russia’s shadow fleet at scale. This gives policymakers new, low-risk, high-impact options for further restricting Moscow’s oil revenues.
An interesting piece, and the idea of the $15/bbl surcharge to go to a fund for Ukraine seems much better than any proposal to reduce oil output. That charge, however, to be collected by shippers, will continue to incentivize the shadow fleet. Alternatively, would it be possible to impose the surcharge on refiners; i.e., allow any refiner in the world to import Russian crude as long as it paid $15/bbl into a Ukraine reconstruction fund? This would eliminate the rationale for the non-seaworthy shadow tankers.
Enforcement of a penalty on refiners could be more complicated, but as noted by the quote from an Indian refiner, the prospect of being frozen out of financial markets could provide a compelling rationale. Moreover, despite the many problems of the current Administration's tariff policies, the President's threat to impose secondary tariffs on Russian oil could contain the kernel of a rationale policy. For example, if an Indian or Chinese refiner failed to pay the surcharge, complying countries could impose a secondary tariff on any oil product, petrochemical or plastic imported from those companies (or countries).
The West needs to incorporate the amount of war reparations, to be paid by Russia, into the negotiations to end this conflict. Iraq's reparations for the First Gulf War, paid through oil revenues, is a model.
Thanks, great read, highly appreciated - but if I read you correctly, you would suggest to reduce the cap to 50USD or even 45USD? - Any specific proposals?
An interesting piece, and the idea of the $15/bbl surcharge to go to a fund for Ukraine seems much better than any proposal to reduce oil output. That charge, however, to be collected by shippers, will continue to incentivize the shadow fleet. Alternatively, would it be possible to impose the surcharge on refiners; i.e., allow any refiner in the world to import Russian crude as long as it paid $15/bbl into a Ukraine reconstruction fund? This would eliminate the rationale for the non-seaworthy shadow tankers.
Enforcement of a penalty on refiners could be more complicated, but as noted by the quote from an Indian refiner, the prospect of being frozen out of financial markets could provide a compelling rationale. Moreover, despite the many problems of the current Administration's tariff policies, the President's threat to impose secondary tariffs on Russian oil could contain the kernel of a rationale policy. For example, if an Indian or Chinese refiner failed to pay the surcharge, complying countries could impose a secondary tariff on any oil product, petrochemical or plastic imported from those companies (or countries).
The West needs to incorporate the amount of war reparations, to be paid by Russia, into the negotiations to end this conflict. Iraq's reparations for the First Gulf War, paid through oil revenues, is a model.
An excellent and extremely informative article! Thank you.
Excellent work, Craig, and a great read. Thank you.
Excellent work, this deserves to be read and shared widely
Thanks, great read, highly appreciated - but if I read you correctly, you would suggest to reduce the cap to 50USD or even 45USD? - Any specific proposals?