The American hegemony is coming to an end. The geography that dominates countries situated thousands of miles from it is making it tough to command them. The Russian oil cap is a prime example. In order to ensure his compliance, Uncle Sam has become a slithering lizard.
G7 Price Russian oil cap has arrived
According to a report by Bloomberg, the Biden administration and its elite friends in the G7 has finally announced the Russian oil cap on November 23. The European Union has given its assent to the proposal. The bloc is certain that their regulations will be ready on time. The only thing left in the implementation is final approval of the price band.
The Biden administration will share the proposed price range with European ambassadors, and if they approve it, the deal will be announced that evening itself. From December 5, countries participating in the scheme will have to adhere to the price cap. These countries include the G7 bloc and the EU. However, companies in the US and the UK will have a grace period up to January 19 next year for completing previous commitments.
Also read: G7 oil price cap: India emerges as the ultimate beneficiary
Checking the viability of cap
But things are not as easy as they look. If the US does not play its cards well, Russia has enough ammunition in the name of friends to nullify the cap. For one, India was never willing to participate in this pseudo-moral posturing. The USA tries tooth and nail and even sent its Treasury Secretary Janet Yellen to convince India of the same. India did not buzz, and in the end, the US had to accept India’s sovereign interest.
This exception meant that the world’s third largest oil importer is not aligned with global elites. India bought 935, 556 barrels of oil per day from Russia in November. How much is it? Well, it is more than half of what the European Union purchased from Russia in the same month.
It is true that they have reduced their dependence on Russian fuel by more than 90 percent, but declining living standards are a big worry on the continent. It is happening because these countries have not been able to locate an alternate source of fuel that is also reliable.
Biden running from pillar to post
Their best bets at the current juncture are the US and OPEC. Here again, the problems are too many to solve. In the United States, Biden’s excessive emphasis on green energy is not a promising start.
Additionally, the operational difficulty of carrying shale oil from thousands of miles away is a big trouble. This is the reason why the Biden administration is hoping to revive old friendships with the Middle East.
A few days ago, Biden made it explicitly clear that it was willing to renege on its human rights stand. A US court wants to charge Saudi Prince Muhammad Bin Salman in the Jamal Kashoggi murder case. But the Biden administration went a step further and told the court that he had immunity from lawsuits. Biden is getting criticised left, right, and centre, but all he cares about at this point is snatching big oil producers from the Russian sphere of influence.
Also read: India clearly and categorically rejects G7’s statement on Russia and Ukraine
Russia and other big producers are on same boat
In the last few months, Russia has gone overboard to get big oil producers on its side. It has its reasons to do so since 30 per cent of its entire federal budget is funded by oil and gas revenue. As soon as sanctions kicked in, Saudi Arabia invested $500 million in three dominant Russian oil companies.
Furthermore, Saudi Arabia bought Russian oil, and assisted Putin in mitigating the effects of the sanctions. By virtue of being the second-largest OPEC country, it also played a key role in OPEC+ oil production cuts, making Russian oil more competitive in the international market.
It has already been indicated that more production cuts are in the pipeline, demolishing American media propaganda about the consequences of the Russian oil cap. Moreover, Putin has also taken the UAE on board, which has its own problems with the Biden administration.
It is not an easy task for global elites. Russia has been able to make a cosy club on its own. The price cap is the final test of American dominance. If it fails, consider it the end of America as we know it. Biden’s anxiety can be understood.
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