Foreign PolicyForeign Policy

How the Russian Oil Price Cap Will Work

By Jeffrey Sonnenfeld and Steven Tian

06 Sep 2022 · 5 min read

This FP analysis puts forth compelling arguments as to why the Russian oil price cap will be a success.

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Last week’s bold announcement by the G-7 of a price cap on purchases of Russian oil has met with skepticism and ridicule from media commentators and pundits. Following months of planning, the oil price cap is a bid to limit the Kremlin’s earnings on exports of its most important commodity and reduce financial support for its war against Ukraine. After the G-7 announcement, the Kremlin immediately said that Russia would not sell any oil to countries abiding by the price cap.

The critics contend the scheme will never work—but they are wrong. Based on our conversations with officials from the U.S. Treasury and the British cabinet, other senior leaders in G-7 governments, and top business executives in several key sectors, it is clear that the critics are much too quick to dismiss the price cap. In fact, the business leaders we surveyed overwhelmingly support the plan. Here are some of the most common questions about the G-7 plan—and why the critics are wrong.

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