Treasury Secretary Janet Yellen stated in a recent interview believes that the European Union could soon be affected by the embargo on Russian oil imports, which could cause gasoline prices to rise once again during this winter.
With Russia still at war with Ukraine, one of their main funding sources for what they call their special military operation comes from their energy exports. Yellen noted, “Western price cap proposal was designed to balance curbing Russian oil revenues helping fund its war in Ukraine, while maintaining some access to Russian oil to hold down global oil prices.”
As of this month, the Group of Seven Nations, including the United States, Canada, France, Germany, Italy, Japan and the United Kingdom (G7) agreed to impose a price cap on Russian oil, though the cap has not been put into effect just yet. The G7 hopes this move would restrict Russian oil sales from going above a certain price. They will be banning cargo services that include transport, insurance, and financing for cargos sold above this cap. Russia could depend on other nations such as China or India but could be faced with higher service costs and competition from other countries selling less expensive product.
What does this mean? Gasoline prices could potentially spike this winter as the embargo is to come into effect in December. Europe is going to have to source its oil from elsewhere, and Russia has threatened to not sell product to any countries that participate in this cap.