European energy crisis. Moscow Feels Oil Sanctions

On January 5, a month has passed since the introduction of the price ceiling for Russian oil. US Treasury Secretary Janet Yellen spoke on Tuesday about the first effects of restrictions in this area at the beginning of a meeting with Canadian Treasury Secretary Christia Freeland.

Sanctions against Russian oil hit Moscow

“Although the price cap has only been in place for about a month, we are already seeing progress towards both of these targets, and senior Russian officials acknowledge that the price cap limits Russia’s energy revenues.” US Treasury Secretary said.

According to Bloomberg, the main grade of Russian oil is sold for more than half the price on international markets. According to the agency, the main factor behind the decline was the embargo on Russian oil transported by sea. The loss of its largest market has left Russia “at the mercy of a tiny group of large buyers, especially China and India.”

Recall that in early December last year, the G7 countries, Australia and the European Union agreed to set a price ceiling for Russian oil transported by sea at $60 per barrel. Initially, the maximum price was to be set at $65-70 per barrel, but Poland, Lithuania and Estonia opposed such a decision. Representatives of the three countries decided that such a ceiling did not meet the main goal of the agreement - to limit Moscow’s ability to finance the war in Ukraine. The restrictions came into effect on December 5, 2022.

The price ceiling is intended to limit Russia’s revenues from oil sales to third countries, since the EU and G7 countries have already banned or restricted oil imports from this country.