A price limit too russian oil, planned by him G7could result in annual savings of $160 billion in crude oil import spending for the world’s 50 largest emerging economies, according to US Treasury Department estimates.
The forecasts come from a Treasury Department study that analyzed the impact of two alternatives on the world oil market: a system that allows supplies priced below a set level, and embargoes without those exceptions.
The price cap would benefit emerging markets
In early September, the G7 countries, including Canada, France, Germany, Italy, Japan, the UK and the US, agreed to set a price cap for Russian oil.
The move aims to reduce Russian revenues, thereby limiting Moscow’s ability to fund its war against Ukraine and stabilize world oil prices.
Under the proposals, refiners, traders and financiers will not be able to handle Russian crude unless it is sold below the price cap.
This would benefit the United States as a net energy exporter, a Treasury official told the British newspaper the Financial Times (FT). But it would be worth even more to the less developed countries of Central Asia and Europe that depend on oil imports.
“The impact is, under any reasonable assumption, much larger for emerging markets that are taking a hit right now,” the official said, according to the FT.
“This means that countries have a significant incentive to benefit from the price cap, including buyers like China and India, and that all emerging market countries that are net oil importers would benefit from lower oil prices,” the official added.
The United States has tried to get countries like China and India to support the G7’s price cap plan by telling them they could benefit from buying cheaper kegs.
With information from the Financial Times.