US Says Russia Oil Price Cap Working, Focusing on Evasion

A senior Treasury Department official this week touted what he said has been a successful implementation of the price cap on Russian oil (see 2305190022), saying it has “struck at the heart of the Kremlin’s most important cash cow.” Eight months after the U.S. and allies announced the first cap on Russian crude oil, Russian energy is “trading at a significant discount” to other oil sources, and has significantly limited Moscow’s profits on each barrel, said Eric Van Nostrand, acting assistant secretary for economic policy.

Van Nostrand, speaking during an Aug. 3 U.K. conference, pointed to Russian finance ministry data that shows federal oil revenues for the first half of the year were nearly 50% lower than the previous year. And although Moscow has at times been able to sell above the various cap levels, he said, the country has had to invest in a “shadow fleet” or in its own insurance companies to do so, which has drawn funding away from its war in Ukraine.

He said the U.S. and its allies “come to this policy with humility and recognize these markets can change rapidly,” adding that Russia “will attempt to evade the price cap” (see 2304170033). Van Nostran said the price cap coalition is “vigilant in monitoring oil markets and the whole coalition remains focused on enforcing our sanctions.”

He also said the U.S. continues to “ramp up our efforts” to tackle Russia-related sanctions and export control evasion, “closing the loopholes in the international financial system that allow for key dual-use goods to continue to move into Russia.”