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Price cap on Russian oil can work only if lowered to 35 USD instead of 60 USD – Ukraine’s Economy Minister

The new Price Cap Policy mechanism has significant potential but price restrictions for Russia must be revised downwards, Ukraine’s Minister of Economy Yulia Svyrydenko said.

The sanctions coalition once again demonstrated unity and developed a mechanism that has a significant potential to increase pressure on the aggressor state. This is an absolute plus…” she said. “However, there is a downside to the adopted decisions. This is a generally comfortable level of price restrictions for Russia, which will minimally affect Russia’s oil revenues if compared with previous years. And, accordingly, it will minimally affect the ability and desire of the Russian Federation to finance the war in the future. Therefore, Ukraine will work to ensure that the level of price restrictions is revised downwards by our allies as soon as possible. The optimal level that will really hit Russia’s oil revenues is $30-$35 per barrel.

The minister also said that after testing in practice, the Price Cap Policy mechanism can be used not only for oil but also for gas, discussions about which are already ongoing.

On December 5, 2022, the EU and UK introduced a ban on oil imports from Russia. Simultaneously, a coalition of G7, Australia, and the EU introduced the Price Cap Policy for the maritime transportation of Russian crude oil and petroleum products by their companies to third countries. Also, according to the decision of the European Union, the import of oil products from the Russian Federation will be prohibited from February 5.

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