Yellen some steps back from $60 Russian oil price cap

US Treasury Secretary Janet Yellen on Friday took steps back from earlier speculation that G7 nations are pondering a $60 per barrel price cap on Russian oil. Yellen also noted that leader have not taken any decision in this regard as well.

Under the G7 plan, Russian crude oil that is transported over water would not benefit from insurance, finance, brokering or other financial services usually provided by G7 nations unless that oil is sold under the cap. The goal is to discourage the sale of oil above the cap and starve Russia of profits it can direct toward fighting Ukraine.

Earlier during the current week, Yellen suggested that Russia could still profit from oil sales at $60 per barrel. She claimed that a price in that range would let Russia “profitably produce and sell oil.” Nonetheless, on Friday, secretary said her comment then was not meant to suggest the G7 has decided on a price in that range.

One benchmark is Russia’s marginal cost of producing oil. She indicated that the cap, which the G7 will impose in December in an effort to limit Russian oil profits that help fund its war against Ukraine, will need to be above Russia’s cost-per-barrel.

Key Quotes

“I did not say that under consideration is a price in the $60s,” Yellen said. “What I meant to say is there are several benchmarks that are relevant in deciding what a price should be.”

“To charge a price less than that would certainly cause Russia to want to shut in the oil,”

“They don’t want to sell oil at a loss.”

“Once the cap it set, it can be adjusted over time to reflect changing economic circumstances”.

“We’re looking historically at what have oil prices been that Russia has earned, and it was in that context that I mentioned a specific number,” she said, referring to her comment earlier in the week. “But no decision has been made, and I did not say that [those are] the prices… under contemplation. No decision has been made.”

“Russia should not profit from having started this atrocious war in Ukraine and shouldn’t be benefiting from profits that result from those atrocities”.