Senior US Treasury official: Oil may rise 40% if the price of Russian crude is not capped

A senior US Treasury official said on Tuesday that the global price of oil could rise 40 percent to about $140 a barrel if a proposed ceiling for the price of Russian crude is not imposed, along with sanctions waivers that allow shipments below that price.

The official said US Treasury Secretary Janet Yellen will discuss imposing the proposed price cap with Japanese Finance Minister Shunichi Suzuki when they meet on Tuesday.

The official said the goal was to set the price at a level that would cover the cost of Russia’s production so that Moscow would be incentivized to continue exporting oil, but not at prices high enough to allow it to finance its war against Ukraine.

He added that the Japanese officials had expressed concern about imposing a price ceiling too low, but had not rejected a possible price range between $40 and $60 a barrel.

As the European Union prepares to impose a gradual ban on Russian oil and ban marine insurance on any tanker carrying Russian crude, a move Britain is expected to emulate, Yellen sees imposing a price cap as a way to keep oil flowing and avoid further price hikes, which could lead to recession.