A loophole in the oil price ceiling allows the Russian Federation to earn billions.

Inflated transportation costs allow Russian companies to make much more from selling crude oil to India than previously recognized. According to the FT, these cost overstatements could bring in more than $1B per quarter in revenue.

Until recently, Russia appeared to be complying with Western restrictions designed to cut its revenues in response to the invasion of Ukraine. Russian oil producers sold their products to India at a price below $60 per barrel. But when factoring in the freight cost, these producers and  traders charge much higher amounts.

As analysts discovered, these additional charges and commissions received from oil transportation on vessels connected to Russia could have brought Moscow $1.2B before July.

The price ceiling imposed by the G7 aims to keep Russian oil flowing while reducing revenues that finance the war. But this restriction, which imposes requirements on buyers, shipowners, and insurers from participating countries, does not limit freight costs.