Russia’s oil revenues are falling due to price caps imposed by Western countries on Russian oil exports ahead of broader restrictions on Russian oil products. Europe is in a good position in terms of managing price pressures, a spokesman for the US Treasury said yesterday Wednesday.

The G7 group of countries, Australia and the European Union will expand sanctions against Russia over Moscow’s war in Ukraine by placing a price ceiling on their oil products such as gasoline and diesel on Feb. 5. At the end of 2022, a ceiling of $60 per barrel was set for the sale of Russian crude oil transported by sea.

Russia is losing significant amounts of money every day by capping the price of Russian crude oil, a senior finance ministry official told reporters during a conference call.

“Every dollar Russia loses in revenue is a dollar that cannot be used to grow its economy or to invest in the weapons it needs to wage its illegal war in Ukraine,” the same official explained.

The official did not provide an estimate of the loss of Russia’s revenue from the export of Russian crude oil. However, the imposition of the restriction has increased shipping costs for some Russian oil cargoes, as it forces countries wishing to obtain Russian oil to use a fleet of non-Western vessels, at the risk of using “less reliable” insurance coverage to transport the cargo. according to the same official.

US officials say the price ceiling “sets” lower prices for Russian oil, which is bought by major buyers, including India and China.

Russian Deputy Prime Minister Alexander Novak said on Wednesday that the country’s oil producers are not facing difficulties in making deals on oil exports, despite Western sanctions and restrictions.

However, Novak acknowledged that the main problems of Russian oil are its significantly low price compared to world oil prices, as well as the increase in the cost of its transportation.

US Treasury Secretary Janet Yellen said Tuesday that senior Russian officials have acknowledged that the cap is cutting Russia’s oil revenues.

This year, several senior US Treasury Department officials met with European government officials and industry players about caps on crude oil prices, as well as upcoming restrictions on other Russian oil products exported by Russia.

Europe can withstand the pressure on its oil products from the war in Ukraine this winter because it has built up crude oil inventories and is relatively warm, according to a finance ministry official.

As a result, cheaper Russian oil could be sold to countries in Africa or other regions that were hit by higher oil prices last year because of the war in Ukraine, the same official said.

Source: Reuters, APE-MPE.