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The G-7 Cap on Russian Oil Is a Subsidy to China

The G-7 Cap on Russian Oil Is a Subsidy to China
A model of a natural gas pipeline is placed on a Russian rouble banknote and a flag in this illustration photo on March 23, 2022. Dado Ruvic/Reuters
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Commentary

There are many mistakes in the G-7 agreement to put a cap on Russian oil. The first one is that it doesn’t hurt Russia at all. The agreed cap, at $60 per barrel, is higher than the current Urals price, above the five-year average of the quoted price, and higher than Rosneft’s average netback price.

Daniel Lacalle
Daniel Lacalle
Author
Daniel Lacalle, Ph.D., is chief economist at hedge fund Tressis and author of the bestselling books “Freedom or Equality” (2020), “Escape from the Central Bank Trap” (2017), “The Energy World Is Flat”​ (2015), and “Life in the Financial Markets.”
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