US Treasury Secretary Janet Yellen issued a stark warning to Russia on Thursday: Comply with a yet-to-be-imposed oil price cap mechanism or face even harsher sanctions. According to Yellen, if Moscow refuses to accept the proposal to limit its oil revenues, the EU and the US will ban the provision of insurance and other financial services to the country.
“I think that from Russia’s point of view, a price ceiling or a price exception to a policy that would otherwise be even tougher on Russia is something that they should be willing to accept,Yellen told a news conference in Nusa Dua, Indonesia, ahead of a meeting of G20 finance ministers and central bankers. According to Yellen, if Russia refuses to comply with the proposal to limit its oil revenues, the EU and the US would be forced to ban the provision of insurance and other financial services to the country.
“So we are proposing an exception that would allow Russia to export as long as the price does not exceed a level to be determined. Otherwise, Russia faces a situation where it will be completely cut off from those critical services, and a substantial amount of Russian oil is likely to be shut down.”, warned the official. She said that the mechanism should be seen as “mitigate the impact that the prohibition of insurance and financial services would have”.
“It will give Russia a way to continue exporting oil at a price that I hope will be quite profitable for them relative to shutting it down,Yellen explained.
The treasury secretary also noted that world oil prices would certainly rise without the price cap, expressing hope that India and China would support the plan, as “would serve their own interests by lowering the price they pay for Russian oil.” Earlier, Yellen said in an interview with the Wall Street Journal that the issue of an oil price cap has already been discussed with China. China’s Ministry of Commerce confirmed that fact on Thursday, but did not reveal any details of the conversation. During her trip east, Yellen is also expected to hold price-cap talks with officials from Japan, India, Indonesia, South Korea and Saudi Arabia, the WSJ reported, citing a senior Treasury official. However, given the many details that need to be worked out to finalize the price cap mechanism, US National Security Adviser Jake Sullivan said earlier this week that talks on the issue “it will take time.”
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.