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Petroleum. Price cap on Russian oil – US Treasury Secretary Janet Yellen comments

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US Treasury Secretary Janet Yellen said on Tuesday that the introduction of a cap on the price of Russian oil by Western countries achieved two goals: it kept oil from Russia on the market and limited Moscow’s income.

Treasury Secretary USA Janet Yellen spoke about the introduced price limit for Russian oil at the beginning of the meeting with the Minister of Finance Canada Christia Freeland. “Although the price cap has only been in place for about a month, we are already seeing progress towards both of these goals, with senior Russian officials admitting that the price cap is limiting energy revenues Russia Yellen said.

Bloomberg reported that the main type of Russian crude oil is sold at more than half the price on international markets. According to Bloomberg, the main factor in the decline was the introduction of an embargo on Russian oil transported by sea. The loss of its largest market left Russia “at the mercy of a tiny circle of big buyers, especially China and India”.

Price cap on Russian oil

G7 countries, Australia and European Union agreed to set a price ceiling for Russian crude oil transported by sea at the level of USD 60 per barrel. The restriction went into effect on December 5. The price cap is intended to limit Russia’s income from oil sales to third countries, as the EU and G7 countries have already banned or limited oil imports from this country.

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The limit works by prohibiting the provision of services related to the transportation of oil by sea, including insurance and financial services, for crude purchased at a price exceeding the set ceiling of $60 per barrel.

Companies from the G7 countries control about 90 percent. global maritime insurance market, which guarantees compliance with the ban.

Main photo source: EPA/MAXIM SHIPENKOV

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