The US Treasury warned of consequences for attempts to hide the price of oil from Russia

The Russian oil price ceiling regime will impose liability on market players who try to hide the origin or true price of purchased oil, said First Deputy Treasury Secretary Adewale Adeyemo. His words are given on the website of the department.

“Those who evade the price cap regime by falsifying documentation or otherwise concealing the true origin or price of oil will face consequences under the domestic law of jurisdictions that apply the price cap regime,” Adeyemo said.

The Deputy Minister explained that the United States is working with the G7 countries to develop a documentation and certification system that will allow service providers to comply with the requirements properly.

Adeyemo also commented on fears that Russia will not sell oil at or below the set price and refuse to export.

“The way the cap is set is the reason why we think it won’t happen. Russia may flare up and say it will not sell below the set price, but the economic side of containing oil simply does not make sense: the price cap creates a clear economic incentive to sell below the set price,” the deputy minister said.

He added that Russia does not have a large number of oil storage capacities, and wells and equipment are not so modern that they can be stopped and then resumed without serious costs. In addition, Moscow is already offering its oil at big discounts, 30% or more, Adeyemo said. This means, in his opinion, that price restrictions are already working to reduce Russia’s income.

On September 2, the finance ministers of the G7 countries (USA, UK, Canada, Japan, Italy, France and Germany) announced their intention to introduce a ceiling on prices for Russian oil. To do this, they want to create a “broad international coalition” that will set a price limit for Russian oil. According to Adeyemo, the introduction of such a measure will guarantee the supply of Russian oil regardless of new sanctions, as well as avoid sharp jumps in gas prices.

According to the plan discussed by the finance ministers of the G7 countries, there will be a ban on financing and insurance of Russian oil supplies if they are carried out at a price higher than the agreed one. According to the Financial Times, the restriction on oil supplies will come into effect on December 5, when the EU embargo on Russian oil supplies comes into force, and on oil products on February 5, 2023. In this way, European officials want to keep the supply of products from Russia, reducing this is its oil revenues.

In response to such a decision, the press secretary of the President of Russia Dmitry Peskov said that when a price limit for Russian gas, oil and oil products is set, these energy resources will be supplied in other directions – to countries that work on market conditions.