Page 11 - FSUOGM Week 12 2023

FSUOGM POLICY FSUOGM

G7 seeks to keep $60-per-barrel

cap on Russian oil

RUSSIA THE G7 group intends to keep the current price from dealing with Russian seaborne crude oil
cap on Russian crude oil at $60 per barrel, as shipments unless they are sold at a price below
Whether or not the cap originally set in December last year, despite some the cap. However, there is a lack of transparency
is adjusted will depend calls from some EU member states to lower the about how effective the cap is working in Asian
on the outcome of price, sources told the Wall Street Journal (WSJ) markets, particularly in India and China.
discussions between last week. India’s government has instructed the coun-
the G7 and the EU. European Commission officials had warned try’s banks and traders to comply with West-
the EU’s member states about the G7’s position, ern sanctions on Russia, including the oil price
as the White House apparently has no appetite to cap, Bloomberg reported on March 12 citing
reduce the pierce cap, according to WSJ sources. sources. But it is unclear what is actually hap-
Western officials had agreed to review the pening in trade circles. According to a Reuters
price cap in March, and Poland and the Bal- report on March 16, some Indian refiners have
tic States have been pressing for a lower cap to been purchasing Russian oil cargoes at above
ratchet up pressure on Moscow’s revenue stream the $60-per-barrel level, while China has been
from hydrocarbon exports. However, according buying Russian crude from the Eastern Sibe-
to the WSJ, US officials believe the price cap is ria-Pacific Ocean (ESPO) pipeline at above
working as intended, and there is no need to the price cap too. Some traders based in Dubai
adjust it. US Treasury Secretary Janet Yellen and Russian oil and gas companies Gazprom
had said in early February that there would be a and Rosneft are seeking payments for crude in
review of the sanction, raising hopes that the cap currencies other than dollars for certain niche
would be lowered. blends of Russian crude that in recent weeks
The price cap functions by prohibiting ship- have also called for above $60 per barrel, Reuters
pers, insurers and financiers in the G7 and EU sources said. ™

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