29.05.22 Sanctions Review

Buyers' Cartel: Russian oil consumers need to negotiate lower prices by setting up an "Anti-OPEC"

Sanctions against Russian energy exports must be designed to hurt Russia more than they hurt Russian gas and oil importers. To do so, it is not the volume of oil and gas bought from Russia that needs to be cut (which only leads to higher prices, compensating Russia for the revenue from reduced sales), but Russia's income from trade in them, write Chris Miller and Edward Fishman in an article for Foreign Affairs.

To accomplish this goal, Russian oil consumers, including the United States, Europe, Japan, and Korea, should form a "reverse OPEC" — a cartel of energy consumers — and cap the price of Russian oil for all buyers (possibly backing it up with the threat of secondary sanctions). Such a move would be an innovation in the sanctions policy: after all, limiting the price is beneficial to all buyers, and it is much easier to negotiate than a ban on purchasing Russian oil.