U.S., allies reportedly working to overcome “Russian military machine”, cut oil price

The U.S. and its allies are working on designing new measures to overcome the “Russian military machine” and stop oil and gas prices from rising to a level that could threaten the world economy, the Associated Press has reported. 

The most essential source of the Kremlin’s financial income is oil. It helps keep the Russian economy to keep afloat despite the ban on exports, sanctions, and the freezing of the Central Bank’s assets. America’s European allies plan to follow the steps of the Biden administration and take measures to stop the use of Russian oil by the end of 2022. The aim is to create an alliance of buyers to control Russian oil prices.

G7 leaders recently agreed to support a price limit for Russian oil, which would probably mean that participating countries would agree to buy oil at a price below the market price.

So, the main idea is to reduce the price of oil for consumers and help stop the war in Ukraine. U.S. Treasury Secretary Janet Yellen is currently on a visit to Asia and is focusing on this issue at meetings. At the conclusion of her visit Japan on July 12, she said in a joint  communique with her Japanese counterpart that the possibility of such restrictions had been discussed.

However, to put this idea into reality, India and China need to be involved. A reminder that these two countries support Russia, even since Russia’s full-scale invasion.

If these countries are not involved in carrying out this plan, Russia will get the same money from these countries as it does now. The U.S. thinks it is realistic to agree with these countries because consumers of Russian oil should be interested in buying oil for lower prices.

The European Union plans to introduce a new package of sanctions against Russia over its war in Ukraine in the coming weeks.

Though discussion about mechanisms for limiting the price of Russian oil continues, they are unlikely to be implemented soon. Some EU countries have also proposed to start imposing sanctions against Russian gas, but the majority of EU member states have not supported this.