US Treasury says Russia’s oil price cap has met its targets

The ceiling imposed on the price of Russian oil by the EU, the G7 and Australia has “achieved its objectives”, according to a report published this Thursday by the US Treasury, one of the key topics of the G7 meeting that begins on Friday in Japan .

“Despite initial market skepticism (…), market participants and geopolitical analysts have now recognized that the price cap achieves its dual objective of reducing Russia’s revenues while maintaining global energy market stability,” the Treasury Department said in the report.

The issue, and more broadly that of the sanctions imposed on Russia, will be on the table at the meeting of the leaders of the G7 countries (Canada, France, the United States, Germany, Italy, Japan, the United Kingdom), which opens Friday in Hiroshima, Japan. Russia’s revenue from oil sales fell 40% in the first quarter, compared with the first quarter of 2022, the Treasury said, citing figures released by Russia’s Finance Ministry.

Revenues fall 43%

“Russian exports continued to flow, contributing to the stability of the world oil market”, and “the price of Russian oil fell considerably, which caused the Kremlin’s income to fall”, details this report. “Before the war, oil revenues constituted 30 to 35% of the total Russian budget”, compared to “only 23%” in 2023 of the Russian budget, details the Treasury. However, Russia “exported 5-10% more crude oil in April 2023 compared to March 2022.”

According to the International Energy Agency (IEA), Russia’s oil exports reached their highest level in three years in March, but estimated revenues are 43% lower than a year ago. Russia manages to redirect its hydrocarbon exports to other countries (China, India, Turkey) but “it seems to have some problems finding buyers for its crude oil and petroleum products,” the IEA said Tuesday in its monthly report.

The 27 countries of the European Union, the G7 and Australia agreed in December on a maximum price of 60 dollars a barrel for crude oil of Russian origin. In February, a maximum price was set for Russian oil products.