Treasury Department officials said on Friday that the gathering momentum behind the idea was already working to suppress prices, pointing out that Russia has already been selling oil to countries such as Indonesia at a 30 percent discount and is trying to lock in long-term contracts before the price cap is in place.
Oil prices rose on Friday, with West Texas Intermediate crude, the U.S. benchmark, gaining more than 3 percent, to just over $89 per barrel. Still, prices are down for the week, and well off the highs of around $120 a barrel in mid-June.
In recent months, Treasury Secretary Janet L. Yellen and her team have been traveling the globe to solidify support for the price cap idea. A central component of those discussions has been how the price would be set, and how it would be enforced.
The finance ministers have not yet agreed on the price at which Russian oil can be sold, but said in a joint statement that it would be “set at a level based on a range of technical inputs and will be decided by the full coalition in advance of implementation in each jurisdiction.” Treasury officials have said that price will be higher than Russia’s cost of production, to ensure that it still has incentives to pump oil, but much lower than global market rates.
The success of the plan could determine whether oil prices surge above $100 a barrel this winter after the European embargo and insurance bans go into force and the weather turns cold.
Ms. Yellen said in a statement on Friday that a price cap would be a critical tool for fighting inflation and protecting Americans from future energy price surges. She acknowledged that although energy prices in the United States had eased recently, they remained a looming problem.
Source Article from https://www.nytimes.com/2022/09/02/business/economy/g7-russian-oil-price-cap.html
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