Friday, March 29

Biden energy envoy Hochstein happy with Russian oil price cap so far


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WASHINGTON — The United States, one of the architects of the G7’s price cap on Russian oil, is so far happy with the way the mechanism is functioning, Amos Hochstein, the Biden administration’s energy envoy said on Tuesday.

The Group of Seven countries, the European Union and Australia implemented the price cap on seaborne cargoes of Russian oil on Dec. 5, setting it at $60 a barrel as part of sanctions that aim to punish Russia for its invasion of Ukraine. The sanctions include an EU ban on seaborne imports of Russian oil and a US ban on imports of Russian energy.

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“So far we are seeing exactly what we wanted to see,” Hochstein told a US Export-Import Bank conference.

He said he spoke on Tuesday morning with the chief executive of “one of the largest crude trading houses” who told him that they have started trading crude below the price cap. Hochstein did not detail that discussion further.

Russia, the world’s biggest exporter of fossil fuels, could cut oil production and will refuse to sell oil to any country that imposes the West’s “stupid” price cap, Russian President Vladimir Putin said on Dec. 9.

Such threats have made some market players anxious that prices could spike if there are cuts. But as the price cap plan was being formulated, Russia has boosted exports to countries like India and China which have not agreed to the price cap plan, which has kept oil flowing to markets.

The US Treasury has said that the cap is “institutionalizing” price discounts on Russian oil that such buyers have enjoyed this year.

The G7 will adjust the price cap level as market conditions change. (Reporting by David Lawder and Timothy Gardner Editing by Marguerita Choy)



financialpost.com