US Official Says Russian Oil Price Cap Is Working Despite Rally

The price cap on Russian oil imposed by the US and its allies continues to work, a senior US Treasury Department official said, even though Russia’s crude keeps rising.

Since the middle of July, Russia’s flagship Urals crude has been quoted above $60 a barrel, while some refined oil products have climbed above the cap set by the US, Group of Seven nations and European Union.

The US is happy to see Russia keeping the market well-supplied, and it doesn’t want to “disrupt the global oil market in a way that could lead to instability,” Eric Van Nostrand, acting Assistant Secretary for Economic Policy, said in an interview on Bloomberg Television.

“Nine months into implementation, the cap is working,” he said, adding that the policy has reduced Russia’s revenue, and any breaches will be looked at by enforcement agencies from the US and allies.

Van Nostrand also said the US is judging the policy’s performance by whether it’s allowing buyers across the world to negotiate bigger discounts for Russian supplies.

“We don’t measure its success just by how many molecules of oil travel under the cap specifically,” Van Nostrand said. “We view it as a market mechanism for changing the oil market’s incentives.”

--With assistance from Rishaad Salamat.