An Analysis on the Effectiveness of Economic Sanctions on Russian Oil, Specifically the G7+ Price Cap

Abstract

Given the economic harm and disruption stemming from the illegal Russian invasion of Ukraine, this paper aims to analyze the effectiveness of economic sanctions on Russian oil, specifically the G7+ price cap and import embargo. Past literature on this topic focuses on the legal framework, economic data and policy process in isolation, whereas this paper unites these topics for a more holistic understanding and approach. The goals of the policies in question are to reduce Russian oil revenue and maintain global oil supply. Upon completing the research, it is clear that the sanction regime and policy is well written, but increasingly lacking in enforcement as time goes on. This results in lower efficacy meaning that in spite of high initial reductions to Russian profits, the impact is lessening since policy implementation on December 5, 2022. However, despite initial concerns, Russian oil production remains high and even though the price cap is being imposed imperfectly, it is working. The more Russia sells, the greater the influence of the policy. As time has passed, Russia has found ways to circumvent the sanctions, further revealing the lack of enforcement. Nevertheless, overall gains from oil sales are down, world oil demand is fulfilled, and the policy is negatively affecting Russian finances.