I don't really understand how the G7 thinks this will work, oil is almost as fungible as money and will go where it's wanted. In some ways it is analogous to the situation on December 7, 2021, 2 1/2 months before Russia invaded:
That was the headline on his December 6 Washington Post OpEd.
The question, of course, is how are you going to enforce it?
From Barron's, June 27:
ADDS White House official quotes
The United States said Monday that the G7 is closing in on a plan to force a lower price for Russian oil in what would be a major escalation of the campaign to punish the Kremlin for its invasion of Ukraine.
"There is also consensus emerging... that the price cap is a serious method to achieve that outcome," President Joe Biden's national security advisor, Jake Sullivan, told reporters at the G7 summit in Germany.
A senior US official described talks within the G7 -- Britain, Canada, France, Germany, Italy, Japan and the United States -- as advancing.
"We're still in final discussions with other G7 counterparts working to finalise this, but we're very close to a place where G7 leaders will have decided to urgently direct relevant ministers to develop mechanisms to set a global price cap for Russian oil," the official said, speaking on condition of anonymity.
The goal of the plan is to starve the Kremlin of its "main source of cash and force down the price of Russian oil."
While the West has already imposed multiple layers of sanctions on Russia in response to Putin's order to invade Ukraine in February, the targeting of the oil industry represents the highest economic stakes so far.
The idea is that consumer countries would effectively set a low price for Russian oil, while Moscow, needing the revenue, would have no choice but to accept.
There are major questions, however, about unity among consumer countries and whether Russia really would cave in or instead might retaliate by cutting energy supplies to Europe.
Energy exports are Russia's biggest revenue earner, while Western countries are among those most heavily dependent on imported oil and gas.
According to Sullivan, the main obstacle to the idea is not so much willingness to go ahead but sorting out the immensely complex logistical and technical aspects....
....MUCH MORE
The second part of the headline riffs off a 2007 post (here at Climateer Investing We Recycle!):
Today's Word is Monopsony: mə-ˈnäp-sə-nē. And, What are Chavez and OPEC up to?
Hugo Chavez is a blowhard who happens to be the dictator of an OPEC
member with a lot of oil. Perhaps it's time to explore the ramifications
of today's word. From Wikipedia:
UPDATE below
In economics, a monopsony (from Ancient Greek μόνος (monos) "single" + ὀψωνία (opsōnia) "purchase") is a market form with only one buyer, called "monopsonist," facing many sellers. It is an instance of imperfect competition, symmetrical to the case of a monopoly, in which there is only one seller facing many buyers. The term "monopsony" was first introduced by Joan Robinson[1] (1933). The term "monopsony power", in a manner similar to "monopoly power" is used by economists as a short hand reference to buyers who face an upwardly sloping supply curve but that are not the only buyer; better, but more cumbersome terms may be oligopsony or monopsonistic competition. A monopsonist may be at the same time a monopolist....MORE
