Yellen announced new restrictions on Russian Oil
2023.02.04 02:38
Yellen announced new restrictions on Russian Oil
By Kristina Sobol
Budrigannews.com – U.S. Treasury Secretary Janet Yellen said on Friday that new price caps on Russia’s exports of oil products would build on the cap set in December, further limit Russian oil revenues, and keep global energy markets supplied.
The Group of Seven economies, the EU, and Australia formed the coalition that imposed the measures. The new price caps were set at $45 per barrel for products that trade at a discount, like fuel oil and naphtha, and $100 per barrel for products that trade at a premium to crude.
The price caps and a ban on Russian oil product imports from the European Union that goes into effect on Sunday also aim to limit Moscow’s ability to fund its nearly a year-old war in Ukraine.
Following the agreement’s release, Yellen issued a statement stating:
“The caps we have just set will now serve a critical role in our global coalition’s work to degrade Russia’s ability to prosecute its illegal war.”
The move came after the coalition banned Western-supplied maritime insurance, finance, and brokering for seaborne Russian crude oil that cost more than $60 per barrel on December 5.
Yellen stated that Russian President Vladimir Putin is being forced to “choose between funding his brutal war or propping up his struggling economy” as a result of the price caps and sanctions.
According to data provided by the Russian Finance Ministry on Friday, the impact of Western sanctions on Russia’s most lucrative export caused the country’s monthly oil and gas budget revenues to fall in January to their lowest level since August 2020.
According to data from traders and Refinitiv, Russia plans to increase diesel exports this month in an effort to deal with the EU embargo, price cap, and lack of tankers.
Public reports indicated that oil importers such as China and India were making use of the price cap to “drive steep bargains” on Russian oil, according to Yellen. She also stated that global energy markets had remained well-supplied.
“Making it harder for the Kremlin to equip its troops and continue this unprovoked invasion,” Yellen stated, the measures are interfering with Russia’s military supply chains.
To safeguard Russian security, Putin issued an order in February of last year calling for a “special military operation” in Ukraine.
This week, Russia’s growth projection for 2023 was increased by 2.6 percentage points by the International Monetary Fund, citing “fairly high” export revenue from the previous year and strong fiscal stimulus from Moscow.
Despite Washington’s awareness of the IMF’s perspective, a senior Treasury official told reporters that the price caps were “changing the trajectory” of Russia’s budget because petroleum was the main source of revenue.
