A price cap on Russian seaborne oil deliveries being developed by the United States and G7 countries could significantly reduce Russia’s revenues while encouraging Moscow to continue to produce oil, 16 economists from top U.S. and British universities told U.S. Treasury Secretary Janet Yellen.

The cap, agreed in principle last month by the Group of Seven rich countries, should lower Russia’s revenues by strengthening the negotiating position of any buyers, economists including Simon Johnson at the Sloan School of Management at the Massachusetts Institute of Technology, Harvard University’s Jason Furman and the University of Chicago’s Ryan Kellogg said in a letter to Yellen, which was reviewed by Reuters.

“While we do not expect all trades will be performed under the price cap, its existence should materially increase the bargaining power of private and public sector entities that buy Russian oil,” they wrote in the letter, dated Oct. 11.

Continue reading at Reuters…

Areas of Focus: Energy Markets
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Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
Fossil Fuels
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Fossil Fuels
Under current policies, fossil fuels will play an important role in the energy system for the foreseeable future. EPIC research is exploring the costs and benefits of these fuels as...