As reported by Reuters, the G7 should soon announce cap on Russian oil export prices and the coalition will likely adjust the level a couple of times a year instead of monthly, a senior US Treasury official said Tuesday.
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The The G7, including the United States, along with the EU and Australia, plans to apply the price cap to Russian oil maritime exports on December 5.as part of the sanctions aimed at punishing Moscow for its invasion of Ukraine.
The aim is to reduce Russia’s oil revenues that finance its war machine, while maintaining flows of its oil to world markets to avoid a price spike. It is planned that on February 5 the export of Russian oil products will be limited.
The coalition has agreed to set a fixed price for Russian oil instead of a floating rate, discounted from an oil price index.
The coalition is concerned that a floating price set below an oil benchmark could allow Russian President Vladimir Putin to easily game the mechanism by reducing supply, from Russia.
A US official said Washington does not expect Russia to retaliate by withholding oil exports, as such a move could drive up world oil prices, but risks damaging Russian oil fields.
Source: Fx Street
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