Washington Examiner

Russian oil price cap hailed as successful by Treasury officials despite rising profits.

The Russian Oil Price⁤ Cap: Choking Off War Revenue and Ensuring Market Supplies

According to senior Treasury Department officials, the Russian oil price‍ cap has proven to be successful ⁤in both stifling ⁢the Kremlin’s war revenue and maintaining its oil supplies on the market. Despite recent ​trading house data indicating that Russian barrels are fetching profits above the $60 limit, Treasury officials ​emphasized that this outcome is not surprising.

Speaking to ⁢reporters⁤ on Thursday, Treasury⁢ officials ‌acknowledged that ‌some Russian oil is still being shipped to buyers at ⁣or above ​the‌ $60 cap.‌ This is happening through illegal “shadow” tankers and​ service providers operating outside the price ⁢cap coalition. However, they emphasized ⁤that even these transactions come⁤ at a cost.

Impact on Russian Government Oil Revenues

Eric Van Nostrand, the Treasury ‍Department’s acting assistant secretary ​for economic policy, highlighted data‍ from ​the Russian Ministry of Finance. According to this data, Russian government oil revenues for the first half of the year have fallen by⁤ 50% compared⁢ to the previous year,‌ despite an increase in oil exports.

The reason behind this decline is ​that any ‍oil⁤ sold outside⁤ the ⁢G-7-backed coalition is still sold at​ a discount relative to ⁤the Brent crude price. This means that Russia’s investment in amassing its shadow fleet ‌or ‍ensuring its own oil exports diverts funding away from⁢ its war​ chest as the cost of⁢ the war in Ukraine continues to rise.

“Since⁣ implementation, this decline in Russian revenues has persisted even as Russian crude oil ⁢export‍ volumes ‍remain above 2021 average levels,” Van Nostrand explained. “As a ⁢result, since the price ‌cap went into effect, ⁢we have seen much more stability in global energy ‌markets than‌ the skeptics⁣ feared.”

The Mechanics⁣ of the Price⁢ Cap

The price cap was set at $60 a barrel ‍for Russian crude oil exports in December, ⁣significantly lower than the ‌$100 price Russia ⁣was ⁣experiencing after the invasion. The‌ cap operates by prohibiting companies in coalition countries ⁣from providing maritime services for shipments ⁤of Russian‍ oil unless the oil is sold⁢ below the cap.

Recent reports and shipping data have raised doubts about the effectiveness of⁣ the price cap. Data from commodities firm Argus Media and other trading houses ⁢indicate‌ that Russia’s ​flagship ⁢Urals grade crude was⁢ shipped above‌ the $60 cap in‌ July. Additionally, the Urals discount relative to Brent crude has⁤ narrowed to $20 per barrel, about half of what it ⁣was in January, just one month after the cap was implemented.

Despite these⁤ concerns, Treasury officials‌ remain⁣ optimistic ‌about the success of the ⁤price​ cap. They argue that it has contributed to broader efforts to counter Russia’s aggression while promoting macroeconomic stability.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER



" Conservative News Daily does not always share or support the views and opinions expressed here; they are just those of the writer."
*As an Amazon Associate I earn from qualifying purchases

Related Articles

Sponsored Content
Back to top button
Available for Amazon Prime
Close

Adblock Detected

Please consider supporting us by disabling your ad blocker