G7 to review Russian oil price cap in March – US Treasury

G7 officials delayed the price cap review on Russian oil imports until March to allow time for market assessments after more caps and sanctions are placed.

PHOTO: Oil production and extraction in Russia. Getty Images

The G7 nations, including the EU and Australia, capped the price of seaborne Russian crude oil imports at $60/bbl in December last year and decided to impose further sanctions and price caps on Russian refined petroleum products on 5 February.

It was stated in December that "the price cap mechanism would be reviewed every two months in response to market developments and set at a minimum of 5% below the average market price for Russian oil and petroleum products", but the review has now been moved to March instead of February.

According to the US Treasury Department, the “price cap coalition” agreed to a two-cap approach for refined products. One cap would apply to products like diesel and gasoline, which "generally trade at a premium to crude," while the other would apply to products like fuel oil, which "trade at a discount to crude.”

But while the G7, EU and Australia coalition has set a price cap of $60/bbl for seaborne Russian crude, it have not set numbers on the two proposed price caps for refined products.  

"This approach will allow us to calibrate the price cap policy for refined products more effectively, given the wide range of market prices at which they trade," said the Treasury on Friday after US Treasury Deputy Secretary Wally Adeyemo met virtually with coalition officials.

Last week, Ukraine called for reviewing the price cap on Russian oil sales due to the low price of Russia’s flagship Urals crude.

By Konica Bhatt

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