So the price cap on Russian oil is Coming but is it even going to work so The G7 is on the brink of imposing a Sweeping sanction that is meant to cut The Russian economy to end the war but It's not that simple and this could Backfire badly even if Russia gets hurt In the process so let's quickly recall The goal of the price cap and that is to Reduce Russia's profits from their oil Sales now ever since the war started and Escalated Russia is still staying afloat They have been earning record revenues From selling their oil and gas now sure The West has turned Russian to the most Heavily sanctioned country in the world But the soaring oil prices have Cushioned the impact now let's Understand why the sanction is Specifically a price cap and not an Outright ban on Russian energy now the G7 could very well impose a global ban On Russian oil refusing to ensure cargos That even transport a single drop of oil From Putin but they didn't and why is That because they know that shutting off Oil and guests from Russia will Spike Energy prices to a whole new level Remember that Russia surprised 26 Percent of energy to the developed world And it's the second largest crude oil Exporter after Saudi Arabia so they Can't take Russian oil out of the Equation completely it will cause supply
Side inflation to spike and that work Cascade to higher food and gas prices Back in the west but there are warnings Both domestic and foreign that the price Cap probably won't work we have Indonesia's Finance Minister saying the Price cap creates a precedent for Anything such economic action will open Pandora's box and the law of unintended Consequences will just kick in she said When the United States is imposing Sanctions using economic instruments That creates a precedent for everything And that's going to create uncertainty For all other countries and we even have U.S officials fearing that the plan has Already backfired and will probably be On under mine again they are referring To the OPEC plus production cards that Likely factored in the price cap to Their decision but here's the thing I Believe they'll still go through with it And they won't stop until reality hits The west and we have to analyze this Strategy because it's likely just Fantasy economics that not only won't Work you could have terrible Consequences for the world we're already Suffering from an inflation crisis and a Global recession especially in Europe it Is virtually unavoidable because if oil Spikes again because of this price kept Be prepared for the Federal Reserve to Hike rates even further causing the
World economy and Global currencies to Crash even harder so let's get into the Mind of Janet Yellen right yes I know It's very weird but she's probably the Architect of this grand plan and she's On a world tour trying to sell the idea To everyone yellen's pushing hard for The price cap saying that Russia could Still profit from selling oil at 60 Dollars now the number isn't decided yet But let's just use 60 dollars as The Benchmark right now the ideas for Russia To upload some oil at 60 dollars or face A shutting off some of the oil supplies But that's really the disconnect with This thinking sure it will reduce some Of Russia's immediate oil revenues but The oil doesn't just disappear it stays With Russia instead the supply of oil Exports from Russia will drop if they Refuse to sell at 60 dollars and if the Volume is significant enough it could Cause prices to rise which will allow Them to earn even more for future sales And this move could cause global prices To spike and it's not just a possibility It's becoming more of a reality Russia Has said time and time again that they Won't sell oil to countries that go Along with the price cap Putin just Won't sell the oil to the G7 we could be In for a better of attrition that will Hurt the whole world and it might not Affect Russia as planned we will see
Higher prices across the board not just At the Palm because oil controls Everything right so this is an obvious Blind spot that will likely backfire if Russia decides to play hardball and hold Back down OLX Sports this might just Devolve into a battle of financial Attrition where Russian revenues might Take a hit but everyone else suffers From higher energy prices now the price Cap could theoretically work if Russia Lacks the outlets to sell off their oil Or if their trading partners are willing To take advantage of the price kept to Push down their buying prices and this Is exactly what Janet Yellen is trying To do with a latest visit to India she's Reminding India how they can benefit From the price cap on Russian oil and According to Yellen the existence of the Cap would give India China and other Major buyers of Russian crude leveraged To push down the price they pay to Moscow and we are happy to have India Get that bargain or Africa or China so a Strategy is to give India China and Other buyers and excuse to push down Their buying prices so if the price cap Is say sixty dollars and the market Price for crude is ninety dollars Yellen Homes India will bugging down the price Of Russian oil to maybe 70 dollars or Even 65. she wants Russian oil to keep Flowing but also cut down revenues to
Put in but she might have overestimated The power of the price cap because India Might not be 100 on board and according To routers an Indian government Officials stated I do not think we will Follow the price cap mechanism and we Have communicated that to other Countries We Believe most countries are Comfortable with it and it's in no one's Case that Russian oil should go offline India is worried about a global price of Oil and they understand if Russia pulls Away Supply it will Jack prices up and Even cause higher inflation but a really Interesting point that we should pay Attention to cancer some of the Conclusions made by the biggest Commodity traders in the world we are Talking about vital trafficura and Gunval and they all mentioned how the Plan could backfire and lead to higher Prices with the heat of Freight in Traffic garage mentioning how does a big Enough Shadow Fleet to continue Russian Crude flows after December the 5th and How these shadow vessels can actually Self-insure themselves plus we have Traffic growth head of oil trading Warning how the price cap will be Impractical if it weren't supported by Russia themselves the CEO of gunval also Mentioned how there are so many unknowns Here I have a hard time to see how it Will work and how the cap will not
Affect current Russian exports which are All directed towards Asia now these are Some of the most intelligent people who Are deal makers in a Cutthroat industry And compared to the U.S treasury I Cannot trust their High experience more But a big shout out to our sponsored Today private internet access now we all Know the importance of keeping some Money outside of the banking system Especially in Gold we want privacy for Our wealth and you should be treating Your data the same way now online Browsing isn't as safe as it used to be With all types of hackers and scams out There you need to be protected guys you Don't want your identity stolen and any Of your financial accounts compromise And this is why having a VPN is so Useful it keeps your data and activity Confidential away from hackers and the Great thing is that Pia is completely Web-based you can download it on your Phone through their app or to your Desktop and you can get started in fact You can use it for up to 10 devices at a Time including your phone desktop and Tablet now pia has world-class servers That cover over 83 countries including Each and every state in the United States and if I'm accessing my trading And stock market accounts I want to make Sure that no one is watching me and that My details are completely Prime private
And you can get started with private Internet access and get 83 discount Using the link in the description below Plus you also enjoy four months for free Just for being an awesome subscriber to This channel so check them out today and Get protected but that's another key Point that I believe the G7 isn't taking Seriously and that is Russia's biggest Customers sticking together now what if Countries like India and China continue Buying Russian oil without using the Price cap as bargaining leverage after All they've already been enjoying Discounted oil for quite some time and This is where we need to take a step Back and think further I think from the Perspective of the ease now ever since The start of the war Russian exports Have been diverted away from the west And moving towards Asia we can see Russian or exports to India and China Have picked up dramatically since the Start of the year and they are part of The brics block so it's highly unlikely They'll stop importing oil from Russia And this is where Janet Yellen likely Got things wrong sure these countries Can use the oil price cap as additional Leverage to push down the price but if They do it could break the trust of the Entire brics members take China for Example they're already suffering from U.S technology sanctions and that's a
Worry that Financial sections might come For the dollar assets such as U.S Treasuries right so they likely won't Want to damage relations with Russia now India on the other hand they are really Enjoying all the deals they have with Russia plus they're also looking to Increase their bilateral trade with Russia to over 30 billion dollars by Year end and we have India's foreign Minister saying Russia has been a steady And time-tested partner any objective Evaluation of our relationship over many Decades would confirm Yes actually Served both our countries very very well So it isn't a good business decision to Use the oil price cap as leverage to Stamp on Russia's neck you'll be a Short-term strategy for short-term gains Plus that Saudi Arabia and OPEC as well Now let's say the price cap works right And for some weird reason Russia decides To go along merrily with the idea they Start selling oil at a mandated price Pushing down the global price of oil now OPEC and Saudi Arabia could act as a Counter to push the price back up when You control 60 of global oil exports you Can do anything that you want OPEC could Simply cut production again to raise Prices once more the same strategy they Did a month back so even if Russian oil Under the price cap flows into the Global market there's only so much that
Can be absorbed if they cut production Enough the global oil price will still Go up the price caps effects will be Nullified but here's the rub there's Little chance for the price cap to Accomplish both objectives at the same Time remember the point of the plan is To hurt Putin's revenues but all also Keep Russian oil flowing into the global Markets basically Yellen wants to eat a Cake and have it too you can't have the Best of both worlds that is fantasy Economics and according to a Trader Dealing with Russian oil he says Russia Is very unlikely to work with a price Cap it doesn't make sense of Moscow both Politically and economically it is much Easier for it to negotiate private deals That publicly commit to some price Limitation dictated by the west and what Does that mean the oil will Flow Away From the west and hit towards the east The physical oil markets were Essentially split into two where the G7 Countries that impose the ban including The United States will suffer from Higher energy prices more Asian Countries like China and India they'll Benefit from cheaper Russian fuel we can See Chinese refiners a really favorite Russian crude overdose from Brazil and When the price cap comes the discount Could naturally get steeper and China Could be import more from Russia now
China needs to secure their energy Supply because once lockdowns ends the Demand for oil will Skyrocket and the Markets already anticipating China's Reopening it could even evolve into a Situation where Chinese Traders they buy Russian oil and reroute it to the West Selling it at a higher margin the exact Same strategy that they reportedly use With Russian LNG reselling the cargos to Europe and this is why the oil price cap Just won't work the G7 is making too Many assumptions and they are ignoring The potential unintended consequences That could unfold because when this goes Through we could see bricks and OPEC Start to close ranks you'll be Essentially one faction against the Other and this is going to cause even More volatility in the oil price and if Russia decides to reduce their exports Altogether we are going to have a bigger Energy crisis across the world prices Are going to spike once again unless Situation in Europe is going to get Worse as winter arrives and the diesel Shortage in America will continue to Drag on so the price cap is going to Come on December the 5th and we have to Be prepared for what's to come it's very Likely the price of oil could shoot to The upside and surprise The Architects Of the plan everything could get a lot More expensive very soon sure U.S
Inflation has dropped to 7.7 in October Hannah markets are rallying like the Recession is over but don't be surprised If everything plunges and we are back in The raid as oil prices suddenly fly up In December higher oil prices means High Inflation and to the Federal Reserve That means more rate hikes for demand Destruction is coming and I don't Foresee the brics countries that Includes India and China going along With the g7s plan and also don't leave OPEC wants oil prices to collapse as Well they want to maximize their Revenues as we head into a recession it Is pure business for them and that's the Demand destruction happens they will cut Production and if somehow the price cap Brings the price of oil down low enough I won't be surprised again if OPEC does Another production card to eject prices Up again and the only guarantee I see From this plan is the splitting of part Of the world pushing us towards a Multi-polar order where energy is going To get more expensive for the west and Supply chains are going to be disrupted Even further I don't think we have seen Peak inflation just yet so let me know What you think in the comments below Will the price cap backfire badly or is The G7 right and the plan will work as Intended let me know in the comments Below stay safe be sure to smash the
Like button and subscribe as we navigate Through these crazy times
