US & allies mull price cap on Russian oil
The US and its allies are considering the introduction of a price cap on Russian oil, in order to deprive Moscow of revenues it can use to finance its war in Ukraine, White House treasury secretary Janet Yellen said on June 21, according to Bloomberg.
The US and Canada have already banned Russian oil imports, while the EU has committed to prohibiting all seaborne imports of Russian crude within six months – a move expected to affect 90% of its purchases from the country. However, soaring international oil prices mean Russia is still collecting greater revenues from its hydrocarbon exports. A study published recently by the Helsinki-based Centre for Research on Energy and Clean Air estimates that Russian revenues from these exports were up almost 40% year/year in May.
Speaking at a press conference in Toronto alongside Canadian finance minister Chrystia Freeland, Yellen suggested the price cap could be implemented through a plan that offers exceptions to a European ban on insuring Russian oil shipments. As part of its Russian oil embargo, the EU will also make it illegal for its companies to insure Russian seaborne oil transport anywhere in the world within six months. The bloc is working with some Group of Seven members including the UK on expanding this ban. According to Bloomberg, 95% of the world's tanker liability coverage is arranged through a London-based insurance organisation called the International Group of P&I Clubs, that must comply with European law.
"We are continuing to have productive conversations, today and with our partners and allies around the world [on] how to further restrict energy revenues to Russia while preventing spillover effects to the global economy," Yellen said. "We are talking about price caps or a price exception that would enhance and strengthen recent and proposed energy restrictions by Europe, the US, the UK and others."