“In order for the price cap to be effective, we need service providers, especially those providing financial services, to help with implementation,” Adeyemo said in a speech prepared for delivery at the annual conference of The Clearing House and Bank Policy Institute. “We want to work with you to design a compliance regime that is as simple as possible and helps to accomplish our objectives.”
After months of pondering, G7 member countries — comprising Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — announced on Friday a price cap on Russian oil to curb what they called Moscow's ability to finance the war in Ukraine.
The Kremlin’s spokesman Dmitry Peskov, responding to the move, warned of “retaliatory measures" against countries that tried to hurt Russia by colluding with the West.
Adeyemo, in an interview with Bloomberg TV on Tuesday, said the Biden administration was encouraged that India was considering joining G7 countries in their collective effort to place a price cap on Russian oil.
“Over the weekend I was encouraged to see a message from the petroleum minister of India saying that they're considering joining," Adeyemo said in the interview.
Indian Petroleum Minister Shri Hardeep Singh Puri on Monday in an interview with CNBC said that his country would carefully assess whether to support a G-7 proposal to impose a cap on the price of Russian oil. “There are many conversations going on due to a large number of factors,” Puri was quoted telling CNBC's Hadley Gamble at Gastech 2022 in Milan, Italy.
The price cap proposal that G-7 finance ministers’ announced last Friday helps accomplish this objective by allowing Russian oil to continue to flow onto the global market using services provided by the G-7, provided it is sold at or below the capped price.
In his prepared speech on Tuesday, Adeyemo said the price cap would allow Russian oil to continue to flow onto the global market using services provided by the G-7, provided it is sold at or below the capped price.
“This will help prevent damaging energy price spikes while reducing Russia’s most critical source of revenue,” he said.
Adeyemo said the Biden administration believed the price cap can succeed even if a number of oil importers do not choose to formally join the plan.
“These countries want to pay lower prices for Russian oil, and the price cap will help them achieve that by offering greater transparency into what price coalition members are paying. In turn, that transparency will give importing countries leverage to drive better deals with Russia — a phenomenon we are already beginning to see in the steeply discounted offers Russia has begun making as they try to get ahead of the price cap,” Adeyemo said. “That alone is enough to drive down Russia’s revenues. In essence, the price cap is designed to create incentives that benefit the global economy while reducing the Kremlin’s revenues.”
Russian Deputy Prime Minister Alexander Novak said on Monday that the OPEC+ alliance of oil producing countries, which includes Russia, will continue to monitor the oil market situation amid the G7 move to limit the price cap of Russian oil.