Energy: Yellen “optimistic” on an agreement to cap the price of Russian oil – Economic Policy

Energy: Yellen “optimistic” on an agreement to cap the price of Russian oil – Economic Policy
Energy: Yellen “optimistic” on an agreement to cap the price of Russian oil – Economic Policy

US Treasury Secretary Janet Yellen said on Wednesday she was “optimistic” about the possibility of reaching, with the countries allied with the United States, a cap on the price of oil sold by Russia.

“I am really optimistic about substantial progress which have been achieved by our teams and the entire G7 so that we were able to cap prices“, declared Janet Yellen, the Minister of Economy and Finance of , this Wednesday during a meeting in Washington with her British counterpart, the Chancellor of the Exchequer Nadhim Zahawi. “The United Kingdom has been an essential ally in the G7’s work to put in place a cap on the price of Russian oil,” added Janet Yellen.

Concretely

The leaders of the G7 countries agreed, at the end of June, to work towards a ceiling on the price of Russian oil, in order to deprive Moscow of part of its windfall from the energy sector. Specifically, Russia would sell its oil to these countries at a lower price to the one to which it gives it up today, but which would remain higher than the production price, so that it has an economic interest in continuing to sell it to them, and so that it does not cut its deliveries.

“There is a large margin between the price of production and what Russia is doing today, in which we can set the ceiling that will create economic incentives for Russia to continue producing oil, while denying them the excess revenue they are getting today ‘today,” said a G7 official at the end of July. He also acknowledged that the deadline to finalize this plan is, de facto, December 5when the European ban on insurers and reinsurers to cover the maritime transport of Russian oil will come into force.

Washington is indeed asking for an “exemption” from this insurance ban for oil that would be shipped below the price ceiling. The challenge is to bring as many countries as possible into this camp. The subject should be on the table at the G20 summit in Bali (Indonesia) on November 15 and 16.

“I am really optimistic that the substantial progress that has been made by our teams and the whole G7 towards us getting to the price cap,” said Janet Yellen, Joe Biden’s Minister of Economy and Finance, this Wednesday during a meeting in Washington with his British counterpart, Chancellor of the Exchequer Nadhim Zahawi. “The United Kingdom has been a key ally in the G7’s work to put a cap on the price of Russian oil,” added Janet Yellen. The leaders of the G7 countries agreed in late June to to work for a cap on the price of Russian oil, in order to deprive Moscow of part of its windfall from the energy sector. Concretely, Russia would sell its oil to these countries at a lower price than the one at which it sells it today, but which would remain higher than the production price, so that it has an economic interest in continuing to sell it to them, and so that it does not cut its deliveries.” There is a significant margin between the price of production and what Russia is doing today, in which we can set the ceiling that will create economic incentives for Russia to continue to produce oil, while denying them the surplus income they get today,” a G7 official said in late July. He also acknowledged that the deadline for finalizing this plan is, de facto, December 5, when the European ban will come into force for insurers and reinsurers to cover the maritime transport of Russian oil. an “exemption” from this insurance ban for oil that would be shipped below the price cap. The challenge is to bring as many countries as possible into this camp. The subject should be on the table at the G20 summit in Bali (Indonesia) on November 15 and 16.


The article is in French

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