Attempts to Set Price Cap on Russian Oil

White House Strategic Communications Coordinator John Kirby said Western countries will not stop trying to put a price cap on Russian oil, despite the failure of such attempts yesterday.

Continued Efforts to Set Price Cap

Kirby said: “Western countries will not give up their attempts to set a price ceiling on petroleum products that Russia exports to the world market, although, according to available information, these efforts have recently been unsuccessful.”

He added: “We continue to believe that price caps are a useful and applicable tool and action will be taken to change them if necessary. “We have spoken with allies and partners about this and there is no sense that price caps as a tool will go away. I have nothing to say about any changes today.”

The Goal of Reducing Russian Budget Revenues

Kirby explained: “Remember, the whole idea was not to remove Russian oil from the market. The goal was to reduce (Russian budget revenues from such exports).”

Failure of Attempts to Restrict Russian Oil

The Financial Times previously confirmed that Russia was able to exceed the oil price ceiling set by the G7 and that the collective West, led by the United States, made a mistake in its calculations.

Shipping tracking firm Argus Media has found that Russian oil transported by sea is selling for more than the ceiling the West has set for buyers on pain of punishment, underscoring the failure of attempts to restrict Russian oil.

Introduction of Price Ceiling

It is noteworthy that in December 2022, the European Union and the G7 countries introduced a price ceiling on a barrel of Russian oil, prohibiting European transport and insurance companies from providing their services if it is sold above $60 per barrel.

Effective February 5, 2023, the price cap was set at $100 per barrel for petroleum products sold at a premium, such as diesel from Russia, and $45 for derivatives sold at a discount.

For its part, Moscow, effective February 1, banned the sale of its oil and its derivatives to any party attempting to adhere to Western price ceilings.

Conclusion

Despite the failure of previous attempts, Western countries, led by the United States, remain committed to putting a price cap on Russian oil. The goal is to reduce Russian budget revenues from oil exports. However, recent reports indicate that these efforts have been unsuccessful so far. It remains to be seen if any changes will be made to the price cap in the future.

Source: TASS