US Senators want secondary sanctions on Russian oil

Democratic and Republican senators on Tuesday proposed that U.S. President Joe Biden's administration use secondary sanctions on international banks to strengthen a price cap G7 countries plan to impose on Russian oil over Moscow's invasion of Ukraine, per Reuters.

Key quotes

Democratic Senator Chris Van Hollen and Republican Senator Pat Toomey announced a framework for legislation to impose the secondary sanctions, which would target financial institutions involved in trade finance, insurance, reinsurance and brokerage of Russia oil and petroleum products sold at prices exceeding the cap.

Both senators are members of the Senate Banking Committee, which oversees sanctions policy.

The Biden administration has been reluctant to impose secondary sanctions, concerned they could complicate relations with importers of Russia oil like China and India.

Elizabeth Rosenberg, Treasury Assistant Secretary for Terrorist Financing and Financial Crimes, told the hearing the price cap was a powerful tool to hit Russia and stabilize energy prices.

Rosenberg indicated that Treasury will in coming weeks release guidelines to address the issue.

Market reaction

The news adds strength to the risk-aversion and exerts downside pressure on the AUD/USD prices but fails to propel the oil to the north amid recession fears.

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