The US admitted that the Russian oil price ceiling was not as effective as expected

(Dan Tri) – US Treasury Secretary Janet Yellen admitted that the EU and G7 imposing a ceiling on Russian oil prices was not as effective as the West wanted.

A Russian oil refinery facility (Photo: Reuters).

Responding to Bloomberg, Secretary Yellen said on September 29 that imposing a ceiling on Russian oil prices did not bring the expected results.

Last December, EU, G7 countries and Australia imposed a ceiling price on Russian crude oil transported by sea at 60 USD/barrel.

The United States and its allies prohibit Western companies from providing insurance and other services for Russian crude oil shipments, unless the goods are purchased at or below the above ceiling price.

The mechanism is intended to force Russia to continue exporting large volumes of oil to prevent a spike in global prices, but reduces the revenue Moscow gets from selling crude.

This move has the goal of increasing pressure on Russia, while also affecting Moscow’s budget used for the military campaign in Ukraine.

Ms. Yellen admitted that the effectiveness of imposing price ceilings has decreased, as Russian crude oil is fluctuating at 100 USD/barrel, much higher than 60 USD.

According to Bloomberg, Russia has succeeded in establishing alternative networks of shipping and insurance companies for Western businesses.

`Russia has spent a lot of money, time and effort establishing its own oil export operations. They have added to their shipping fleet, provided insurance services and that type of transaction is not

The US Treasury Secretary pledged that Washington would implement efforts to prevent circumvention of restrictions, but did not provide details on any specific new measures.

`We are prepared to act,` she said, adding that the G7 was ready to `consider over time whether there are ways in which the price ceiling mechanism could be made more effective.`

In April, Bloomberg quoted sources as saying that EU member countries still seem to use Russian oil despite sanctions imposed on Moscow, through a third country, India.

New Delhi has not joined the price cap mechanism and instead has increased its purchases of discounted oil from Russia.

`Russian oil is finding its way back to Europe despite all the sanctions and India’s increased exports,` Viktor Katona, lead crude oil analyst at Kpler (Belgium) analytics company, told Bloomberg.

Indian oil refineries take advantage of buying Russian oil at cheap prices, refining it into fuel and selling it to the EU at competitive prices.