Limiting the effects of the war: The US and the Allies negotiate an oil price cap

mitigate the effects of the war
The US and the Allies are negotiating an oil price limit

An oil price cap could help mitigate the economic consequences of Russia’s war of aggression. According to US Treasury Secretary Yellen, this could reduce Russia’s revenues while gaining more oil for the international market.

According to US Treasury Secretary Janet Yellen, the US and allied countries are negotiating a price cap for oil to limit the economic consequences of the Ukrainian war and reduce Russia’s oil export revenues. The partners are discussing how they could “prevent negative effects on the global economy,” Yellen said during her visit to Canada.

US Treasury Secretary Yellen identified “price caps” or “price exemptions” as possible options. According to her, both would have several consequences: “they would increase Western sanctions on Russia’s energy resources,” depress the price of Russian oil, and thus reduce the Russian government’s revenue – while allowing more oil to enter the international market. Asked if US President Joe Biden intends to seek consensus at the G7 summit in Germany next week, Yellen said: “We are working very actively with our partners.”

According to Yellen, the price cap would also prevent “side effects on low-income and developing countries”, which are currently facing high food and energy prices.

Denmark issues early warning of gas

Yellen announced the talks during a visit by her Canadian counterpart and Deputy Prime Minister Chrystie Freeland. The meeting discussed strategies to address the effects of the Ukrainian war, high inflation and problems in global supply chains.

Meanwhile, the Danish government has announced an early warning level in the emergency gas plan for gas supply concerns. “The situation is serious and has been exacerbated by limited supplies,” said Dan Hansen, head of the Danish Energy Agency. Danish gas storage facilities are currently 75 percent full and more gas has recently been added. At the end of May, Gazprom announced that it would stop supplying the Danish company Orsted.

The gas emergency plan – which is based on the EU regulation of 2017 – is followed by a degree of emergency and a degree of emergency. The plan allows EU countries to support each other in gas supplies, but can also justify gas allocation. Germany announced an early warning of gas at the end of March. Last Friday, the Federal Network Agency classified the situation as “tense” in its financial report after the Russian group Gazprom cut its gas supplies to Germany several times.

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