The G7 plan to cap the price of Russian oil could provide $160 billion in annual savings for the 50 largest emerging markets.
This is reported by the Financial Times with reference to data from the U.S. Treasury Department.
The U.S. Department of the Treasury developed this analysis on the eve of the annual meetings of the IMF and the World Bank. High energy costs caused by Russiaʼs war against Ukraine will be the central topic of the meeting, as one of the heaviest burdens on the world economy.
Washington insists that the scheme it advocates will limit energy costs around the world.
Last month, the G7 approved plans to cap the purchase price of Russian oil. Starting in December, it will allow Western companies to service and insure Russian oil shipments around the world, exempting them from EU and other Western embargoes if sales fall below the cap. Western allies have not yet agreed on such a restriction.
The U.S. Deputy Treasury Secretary Wally Adeyemo said last week that this level will be "much higher" than the cost of production in Russia. However, there are still doubts and uncertainties in the oil market about how well this will work in practice, how such a move will affect the market and how Russia will react.
The U.S. Treasury Departmentʼs research is expected to be released to external partners in the coming weeks.
"Despite considerable uncertainty, Treasury analysis shows that combined, the price cap exemption could save the 50 largest emerging markets (EMs) and low-income countries (NICs) about $160 billion annually in oil import costs," — said the U.S. Treasury official.
"This means that countries have a significant incentive to benefit from the price cap, including buyers such as China and India, and that all countries that are net oil importers will benefit from lower oil prices," he added.
The Treasury did not specify what price level would lead to such savings.
- At the beginning of September, the USA announced that the G7 countries would set a price limit for Russian oil by December 5. Countries want to see it at the level of $40-60 per barrel, which will seriously affect Russian revenues.
- Against the background of the war, the USA and the EU are phasing out Russian fuel. The EU allocated half a year to abandon oil, and up to eight months to abandon petroleum products. Oil deliveries through pipelines have not yet been sanctioned.