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Russia's crude oil surpassed the price ceiling set by the Group of Seven (G7), leading to a significant rise in income from oil exports, Bloomberg reported on Aug. 11., citing statistics provided by the International Energy Agency.
Last month, the weighted mean price for the country's crude oil transported by sea reached $64.41 per barrel. Russia's oil revenues hit an eight-month peak in July at over $15 billion, up 20% from the previous month.
However, their July revenues are still down over 20% from this time last year.
The G7 introduced the cap to limit Moscow's funds for its war against Ukraine. Within the cap system, businesses are granted permission to transport Russian oil only when their payment falls below the threshold price. Otherwise, they lose access to certain G7 services.
Caps and sanctions following the full-scale invasion of Ukraine in February 2022 have led Moscow to primarily seek buyers in India and China.
Given the current scenario where Russian crude grades are being traded above the approved G7 price cap, the chance of triggering price increases gains momentum. If shipping firms and insurers become wary of accepting Russian shipments exceeding the cap, this could lead to a tightening of supplies and global price escalation.
However, proponents of the cap system say it is still working.
“Any money Russia spends to create an ecosystem outside of the price cap takes resources away from its ability to fund its barbaric war,” U.S. Treasury Department spokesperson Megan Apper said.