Western nations are trying to set price caps for Russian refined petroleum products in order to maintain the flow of Russian diesel. However, markets can be complicated, and things could go wrong, Treasury Secretary Janet Yellen stated.
The Group of Seven and Australia implemented Dec. 5 a price limit on Russian oil, prohibiting the Western supply of maritime finance, insurance, and any other services to cargoes with a value of more than $60/barrel.
Yellen said that they are currently finalizing price caps for Russian refined petroleum products such as fuel oil and diesel. These prices will take effect on Feb. 5, along with a ban by the European Union on diesel imports.
She said that one will be for high-value goods, which are often sold at a premium over crude oil. The other will go for low-value items like fuel oil.
Yellen stated that setting new price caps for oil was more difficult than it had been for refined crude due to the variety of products available and their price structure, as well as the necessity of ensuring the continued supply of Russian diesel.
She said that although it is more complex, they have been hard at work to reach the same goals as the larger cap on Russian crude oil.
She said that while there is always the possibility that something might not go as planned, she explained that they have studied the markets thoroughly and believe that they will come up with caps that achieve the same results with crude oil so far. However, adjustments can still be made in the future.
Although the oil price cap was only in effect until Dec. 5, its success has been evident so far. Yellen cited a fall in crude oil prices from Russia.
She said, “They have expressed concerns about revenue and we haven’t seen any sign that Russia withholds oil from the marketplace.”
