The Biden administration’s push to form an international buyers’ cartel to cap the price of Russian oil is facing resistance amid private sector concerns that it cannot be reliably enforced, reports The New York Times.
The price cap has been a top priority of Treasury Secretary Janet L. Yellen, who has been trying to head off another spike in global oil costs at the end of the year. But the untested concept has drawn skepticism from energy experts and, in particular, the maritime insurance sector, which facilitates global oil shipments and is key to making the proposal work. Under the plan, it would be legal for them to grant insurance for oil cargo only if it was being sold at or below a certain price.
The insurers, which are primarily in the European Union and the U.K., fear they would have to enforce the price cap by verifying whether Russia and oil buyers around the world were honoring the agreement.
“We can ask to see evidence of the price paid, but as an enforcement mechanism, it’s not very effective,” said Mike Salthouse, global claims director at The North of England P&I Association Limited, a leading global marine insurer. “If you have sophisticated state actors wanting to deceive people, it’s very easy to do.”
He added: “We’ve said it won’t work. We’ve explained to everybody why.”
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