US Treasury Secretary reveals Russian oil price cap target

Janet Yellen has called for a $60-a-barrel price ceiling on crude from Russia

Setting a price ceiling for Russian oil at about $60 per barrel is expected to reduce Moscow’s energy revenues while still ensuring profitable production, according to US Treasury Secretary Janet Yellen.

“So, certainly a price in that range would be sufficient to feel that Russia could profitably produce and sell oil,” she told an event at the International Monetary Fund and World Bank meetings in Washington, adding that Russia’s cost of production was “low.”

Yellen stressed that Moscow has been willing to produce and sell oil in the $60 range over the past five to seven years. Russian Urals crude has traded at around $75 a barrel in recent months, or a $17 discount to benchmark Brent futures.

“The objective is to protect the world from the consequences of a global spike in oil prices,” the top official said in relation to the price cap.

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She added that Washington and its allies are still discussing where to set the price for a capping mechanism.

Washington’s efforts to set a price cap on Russian oil to deprive Moscow of energy revenue gained support from the G7 countries. But large importers like India and China, along with many developing countries, did not join them. 

Earlier this month, the EU approved its eighth package of sanctions on Russia, which includes a price ceiling on oil that would take effect after December 5, 2022 for crude and February 5, 2023 for refined petroleum products.

Russian President Vladimir Putin has warned that Moscow won’t supply energy to countries that adopt measures contradicting the terms of existing oil and gas contracts.

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