G7 Finance Chiefs Agree on Russian Oil Price Cap, But Level Not Set Yet

Group of Seven finance ministers has agreed to impose a price cap on Russian oil, but that cap level has not been set yet. The ministers of the wealthy industrial democracies confirmed their commitment to a price cap after a virtual meeting today. 

The price cap is aimed at slashing revenues for Russia’s war in Ukraine while keeping crude oil flowing in order to avoid price spikes. 

The G7 is made up of the United States, the United Kingdom, Canada, France, Germany, Italy, and Japan. The ministers said they would seek a broader coalition of oil-importing countries to purchase Russian crude and petroleum products only at or below the price cap and will invite their input into the plan.

However, key details of the plan have been left out. The ministers said they would work to finalize the details through their own domestic processes. They are aiming to align the cap with the start of European Union sanctions, which will ban Russian oil imports into the bloc starting in December.

The ministers said that the per-barrel level of the price cap would be determined later “based on a range of technical inputs” to be agreed upon by the coalition of countries implementing it.

In a statement, the G7 ministers said they confirmed their “joint political intention to finalize and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally.” 

The provision of 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.”

Some officials have expressed worry that the price cap will not be a success unless major importers like China and India also participate. These two nations have sharply increased their purchases of Russian crude since Moscow launched its invasion in February.

But other G7 officials have said China and India have expressed interest in buying Russian oil at an even lower price in line with the cap.

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