FX.co ★ Price cap on Russian oil proves to be ineffective

According to US Treasury Secretary Janet Yellen, the price cap imposed on Russian oil by the Group of Seven (G7) countries is no longer working as hoped since it has failed to affect crude prices in any way. This is what she told reporters when asked about why Russian Urals crude was trading close to $100 a barrel instead of $60 a barrel as supposed by the price cap. “Russia has spent a great deal of money and time and effort to provide services for the export of its oil,” Yellen said. “They have added to their shadow fleet, provided more insurance, and that kind of trade is not prohibited by the price cap,” she explained. Yellen also noted that it was difficult to say exactly what Russia’s net profit on the oil shipment was. Yet, the US finance minister pledged that the G7 coalition would consider ways to make the limitation policy more effective. John Kirby, the National Security Council Coordinator for Strategic Communications, confirmed that the US was not planning to abandon its price cap on Russia's crude oil. Earlier, Deputy Head of the UK Treasury Joanna Penn noted that Britain was discussing the efficacy of the price ceiling with its G7 partners and its possible revision given a shift in global oil prices.