- US Treasury Secretary Janet Yellen will travel to Asia next week.
- One of the things he promotes is a potential cap on Russian oil prices.
- Russia’s oil price cap was one of the main items on the G7 agenda at last month’s meeting of the world’s largest economies.
US Treasury Secretary Janet Yellen will seek support for a US idea to cap Russian export crude oil prices during an upcoming visit to Asia next week, the Associated Press reported.
Yellen will attend the G20 meeting of finance ministers in Indonesia and travel to Tokyo and Seoul to make the case for oil price caps. China was not on her trip, the report said, but Yellen called on China to use its special relationship with Russia to quickly end the war in Ukraine.
Russia’s oil price cap was one of the main items on the G7 agenda at last month’s meeting of the world’s biggest economies, where leaders agreed to study ways to enforce it but acknowledged it would need support from big importers, notably China and India.
Japanese Prime Minister Fumio Kishida earlier this month suggested keeping a cap on Russian crude at half the current price. Russian oil already sells at a steep discount to alternatives, and the cut in half is close to the level Russia uses for its federal budget.
However, analysts argue that the price cap weapon is unlikely to work because of challenges in garnering sufficient support from oil consumers and producers. Also, the implementation of the measure seems to be quite complicated.
As almost all global marine insurance is concentrated in Western companies, tying prices to insurance coverage seems to be a moot point.
There is also the question of how Russia will react to the price cap. “Do we really think that Russia will actually accept this and not retaliate? It sounds like a very nice theoretical concept but I don’t think it will work in practice,” Energy Aspects’ Amrita Sen told CNBC earlier this week.
By Irina Slav for Oilprice.com
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