GROUP of Seven finance ministers agreed on Friday to impose a price cap on Russian oil aimed at slashing revenues for Moscow’s war in Ukraine while keeping oil flowing to avoid price spikes, but Russia vowed to halt sales to countries imposing it.
The ministers confirmed their commitment to forming a buyer’s cartel after meeting virtually. They said, however, that key details, including the per-barrel level of the cap, would be determined later “based on a range of technical inputs” to be agreed by the coalition of countries implementing it.
“Today we confirm our joint political intention to finalise and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally,” the ministers said.
The provision of Western-dominated maritime transportation services, including insurance and finance, would be allowed only if the Russian oil cargoes are purchased at or below the price level “determined by the broad coalition of countries adhering to and implementing the price cap”.
Oleg Ustenko, a senior economic adviser to Ukrainian President Volodymyr Zelenskiy, welcomed the development, and said he expected the price range to be between $40 (R692) and $60.
“This is fantastic. It’s exactly what we needed” to reduce the revenues that Russia was collecting, he said. Brent crude futures rose 66 cents to $93.02 (R1607) a barrel on Friday.
Zelenskiy himself, in a video address, said a cap should also be imposed on Russian natural gas exports.
A senior US Treasury official said the coalition would set a dollar price limit for Russian crude and two others for petroleum products – not discounts to global market prices. The cap would be revisited as needed.
The G7 ministers said they would work to finalise the details in time to launch by December 5, when new EU sanctions initiate a ban on Russian oil imports.
German Finance Minister Christian Lindner, the current G7 finance chair, said the price cap on Russian oil exports was designed to reduce President Vladimir Putin’s revenues.
“At the same time, we want to curb rising global energy prices. This will minimise inflation globally,” he said.
Reuters