Russia could evade the G7's plan to cap crude prices and still export 90% of its oil, US Treasury official says

• Russia could still evade the G7's plan to cap crude prices and sell most of its oil, a US Treasury official told Reuters.
• Russia has enough tankers to bypass the price cap measure, and has purchased more this year to go around sanctions.

Russia could evade the G7's plans to cap crude prices and still export 90% of its oil, a US Treasury official said on Friday.

G7 nations have been working on a plan to cap Russian oil prices by the end of the year, in attempt to lower Moscow's war revenue. Full details of the price cap have yet to be worked out, and the proposal so far has faced a lukewarm response from Russian allies like India, who have snapped up discounted Russian crude since the invasion of Ukraine.

Russia has also threatened to completely stop selling oil to any country that imposes a price cap, which some experts initially expected to dent the nation's finances. But even if Russia refuses to follow the price cap, the nation still has the resources to evade those sanctions, and exporting 80% to 90% of its oil despite the price cap is "not unreasonable," one unnamed US Treasury official told Reuters.

That's because Russia still has access to tankers – enough to bypass the price cap measure, and Russian oil exporters have purchased more this year to bypass other sanctions.

Additionally, current rules surrounding the price cap make it so that shipping and insurance firms could operate on an honor system, reporting that oil was sold according to the cap without submitting verifications to a registry.

Verifications could also be as simple as asking Russian oil customers to promise in writing that they would adhere to the price cap, the Treasury official added. Another unnamed official said US lawmakers were aware there was no way for insurance firms to enforce the price cap mechanism.

Russia exported over 7 million barrels of oil a day in September according to Reuters, meaning 5 million to 6 million barrels of crude a day could still make their way to the spot market. That would leave most of Russia's oil revenue intact while slashing another 1%-2% of the world's oil supply, potentially sending crude prices even higher.

That leaves the Western nations mostly focused on mitigating any self-damage from the price cap mechanism, former US State Department chief economist Daniel Ahn told Reuters.

"It's going to be less damaging than a complete seaborne import ban. They shot themselves in the foot, but they're now kind of trying to bandage it a bit," he said.