Japan Buys Oil From Russia In Break With Western Allies

Japan has decided to keep purchasing crude oil from Russia, even though it is above the $60 per barrel price cap established by G7 nations in response to Russia’s invasion of Ukraine in 2014. The US has approved Japan’s break from the restrictions, but the decision marks a breach in the G7 alliance, which includes Canada, France, Germany, Italy, Japan, the UK, and the US. Japan, with limited domestic energy reserves, will continue to buy crude oil from the Sakhalin-2 project in the far east of Russia to guarantee access to the natural gas reserves on the site. The Sakhalin-2 initiative is 25% owned by Mitsubishi and Mitsui, two significant Japanese companies.

The price cap policy only allows G7 maritime services industries, the European Union, and Australia to offer trade finance and other insurance services sold below the benchmark for Russian oil. As of Monday morning, Brent crude oil, the fuel-price benchmark of oil drilled in the Atlantic Ocean, was priced at $81 per barrel.  

Japan has been more cautious than other G7 nations in expressing their support for Ukraine given their reliance on Russian energy resources. Germany, which depended on Russia for more than half of its natural gas imports before the invasion began early in 2014, hastened to secure other power sources as the cost of electricity soared more than tenfold last autumn. The US Treasury Department stated that the cap price is “high enough to maintain a clear economic incentive for Russia to continue selling oil on global markets.”