The measure could widen the gap between supply and demand
Proposed U.S. limits on the price of Russian oil could further aggravate the global energy crisis because they would not help solve the supply problems facing the world, the Indonesian finance minister told CNBC on Friday. , Sri Mulyani Indrawati.
According to the official, energy prices are high because demand exceeds supply, which has already been disrupted due to the Russian military operation in Ukraine and subsequent Western sanctions targeting the country’s energy sector.
“Putting a cap is certainly not going to solve the problem, because it is about the quantity that is not adequate, compared to the demand that is in place“, Indrawati said, speaking to the press on the sidelines of the G20 meeting of finance ministers and central bank governors in Bali, Indonesia.
The official added that the gap between supply and demand will only widen in the coming months as the heating season approaches.
Indrawati’s statements come amid US Treasury Secretary Janet Yellen’s trip to Asia, during which she aims to drum up support for the price cap mechanism. Yellen called the price cap on Wednesday “one of our most powerful toolsto fight inflation.
Also on Wednesday, Assistant Secretary of State in the US Office of European and Eurasian Affairs Molly Montgomery said Washington sees the proposed mechanism as an opportunity to pay less for Russian energy imports and stabilize the global oil market.
Analysts, however, doubt that the measure will work, as Russia could choose not to sell its oil at the price set by Washington. US National Security Advisor Jake Sullivan recently said that introducing a price cap mechanism will take time as many details need to be worked out before it can be finalized.
The United States has tried to persuade India and China to support the price cap, but experts doubt they will agree, as both countries currently source Russian crude at deep discounts.
Indrawati said the source of the current crisis is the conflict in Ukraine.
“It is because of this war, that all the disruption of all this supply, as well as the implication of the war in terms of sanctions – it even creates a more complex situation,she said, referring to the US embargo on Russian oil imports and the EU’s partial oil embargo.
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