U.S. Treasury Secretary Janet Yellen said on Tuesday that the price cap on Russian oil imposed by Western countries in December so far appeared to be achieving its goals of keeping Russian oil on the market while limiting Russia’s revenues.
“While the crude oil price cap has only been in effect for around a month, we have already seen early progress towards both of those goals, with senior Russian officials having admitted that the price cap was cutting into Russia’s energy revenues,” Yellen said at the start of a meeting with Canadian Finance Minister Chrystia Freeland.
The crude oil price cap was imposed on Dec. 5 by G7 countries, including the United States, Canada and Australia, prohibiting the use of Western-supplied maritime insurance, finance and other services for cargoes priced above the cap level of $60 per barrel.
Russian Urals grade crude for delivery to Europe was quoted at $52.48 on Tuesday, maintaining a steep discount to benchmark Brent crude, which was trading at $80.82.
Yellen said energy markets remained well-supplied following the European Union’s ban on imports of Russian crude oil, also imposed on Dec. 5.
“Public reports indicate countries are using the price cap to drive steep bargains on the price of Russian oil imports,” Yellen added.
But Moscow has vowed to ban oil supplies to countries that abide by the price cap starting on Feb. 1, and Russia’s energy ministry said earlier on Tuesday it is working on additional measures to enforce the ban on direct or indirect use of the price cap.
The G7 coalition also is seeking to set two price caps by Feb. 5 on Russian refined petroleum products, such as diesel and fuel oil, with a G7 official saying this may be more complicated to set than a crude oil price cap.