The United States on Friday welcomed the G7, European Union and Australia’s US$60 price cap on Russian oil and said the move will ‘particularly benefit low- and medium-income countries… borne the brunt of elevated energy and food prices’ caused by Russia’s war on Ukraine. US treasury secretary Janet L. Yellen said the move will also ‘further constrain (Russia president Vladimir) Putin’s finances and limit revenues to fund his brutal invasion’.
“Together – the G7, European Union, and Australia – have now set a cap on the price of seaborne Russian oil that will help us achieve our goal of restricting Putin’s primary source of revenue for his illegal war, while preserving stability of global energy supplies.”
“Today’s announcement is the culmination of months of effort by our coalition, and I commend the hard work of our partners in achieving this outcome.”
The US treasury secretary also said the cap will encourage flow of discounted Russian oil and protect consumers and businesses from supply disruptions that have stemmed from the war in Ukraine and affected economies worldwide.
“Whether these countries purchase energy inside or outside of the cap, the cap will enable them to bargain for steeper discounts on Russian oil,” the treasury secretary’s statement said.
On Friday the G7 (in which the EU is an additional member) and Australia said they had agreed on a per barrel price cap for Russian seaborne crude oil.
This was after EU members overcame resistance from holdout nation Poland and hammered out a political agreement.
The cap is expected to come into effect from December 5.
READ | G7 group agrees $60 per barrel price cap for Russian oil
Poland had initially resisted the cap and argued for additional measures to ensure the cap is kept below market price; the revised deal says the cap will be at least five per cent below.
Further details on the deal will be released Sunday, news agency Reuters said.
European Commission president Ursula von der Leyen said the cap will significantly reduce Russia’s revenues. “It will help us stabilise global energy prices (and) benefit emerging economies around the world,” she tweeted.
She also said the will be ‘adjustable’ to react to market developments. The earlier proposal had a cap of $65-$70 per barrel with no adjustment mechanism.
