U.S. plans to limit the insurance of Russian oil shipments in order to punish the Kremlin for its aggression against Ukraine could force the price of oil up dramatically, so Washington believes a cap on oil prices may be needed.
The U.S. Treasury believes that if the price of Russian oil is not limited to around $40-60 per barrel, it may skyrocket to $140, Bloomberg reported on July 12 with reference to a senior finance official.
As the newspaper writes, the EU and UK plan to ban insurance for tankers transporting Russian oil products. With the United States, EU, and UK insuring around 90% of Russian oil shipped around the world, the move could deprive the world market of up to 5 million barrels of oil and petroleum products every day.
According to the analysis of the U.S. Treasury Department, removing such an amount of supply of Russian oil from the market will significantly increase the price of fuel, up to $140 per barrel.
Supporters of the price cap plan would like to set the limit on Russian oil just high enough to give Moscow an incentive to continue exporting, the agency writes. According to estimates, the price cap is proposed to be set in the range of $40 to $60 per barrel.
However, the initiative to limit prices for Russian oil is criticized as too complicated and difficult to implement. It is noted that this plan is largely based on the assumption that European countries will comply with bans on imports and insurance.
According to Bloomberg, U.S. Treasury Secretary Janet Yellen has begun a 10-day trip to Asia with plans to call on governments in the region to support the oil price cap plan.
It was previously reported that the United States and its allies want to forcibly limit the price of Russian oil at the level of $40-60 per barrel. During the G7 summit, all states agreed to consider ways to limit the price by banning the provision of transport and insurance services.