G7 countries agree to cap the price of Russian oil

Finance ministers from the G7 group of countries – the United States, Japan, Canada, Germany, France, Italy and the United Kingdom – have said they will ban the provision of “services that enable maritime transport of crude oil and petroleum products of Russian origin in the world”. above the ceiling price. This could block insurance coverage or funding for oil shipments.

The maximum price would be set by “a broad coalition” of countries, they said in a joint statement. It would come into effect alongside the next batch of sanctions from the European Union, which includes a ban on maritime imports of Russian oil from December.

Russia had previously threatened to retaliate by banning oil exports to countries that apply price caps.

“We simply will not supply oil and petroleum products to those companies or states that impose restrictions, because we will not work in an uncompetitive way,” Deputy Prime Minister Alexander Novak told reporters on Thursday, according to the report. state news agency TASS.

The Biden administration has been pushing for months for governments to introduce price caps. The West has already sanctioned many Russian energy exportsbut Moscow continued to earn billions of dollars a month by diverting oil to China and Asia.
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“The price cap is specifically designed to reduce Russian revenues and Russia’s ability to finance its war of aggression while limiting the impact of the Russian war on global energy prices, particularly for countries low and middle income,” the G7 finance ministers said.

But the measure still requires work and will be extremely complex to manage. How, when and to what extent the price of Russian oil could be capped remains to be seen. It would also need wider international support to be effective.

“[We] urge all countries still seeking to import Russian oil and petroleum products to commit to do so only at prices at or below the ceiling price,” the finance ministers said.

Since the start of July, oil prices have fallen about 18% in anticipation of a reduction in demand by the recession, but they are still about 20% higher than they were there one year old.

“While we have seen energy prices decline in the United States, energy costs remain a concern for Americans and continue to be elevated globally,” the US Treasury Secretary said. , Janet Yellen, in a statement. “This price cap is one of the most powerful tools we have to fight inflation and protect workers and businesses in the United States and around the world from future price spikes caused by global disruptions. “

Novak called the proposals to impose restrictions “completely absurd” and said they could destroy the global oil market, TASS reported.

“Such attempts will only destabilize the oil industry, the oil market,” he said.

Russia further cuts gas supply to Europe as inflation hits new high

Flows of crude oil and other petroleum products to the United States, United Kingdom, European Union, Japan and South Korea have fallen nearly 2.2 million barrels per day since the start of the war in Ukraine, according to the International Energy Agency.

But two-thirds of that decline was redirected to other markets, helping to fill the coffers of Moscow. Export earnings in July were around $19 billion, the IEA said.
Russia’s control of large swathes of the world’s energy supply remains a major problem challenge six months after its invasion of Ukraine. This week, Russia temporarily stopped natural gas deliveries to the region via a vital pipeline and cut off all supplies to a French utility, exacerbating the problems that have driven European inflation to a record 9%.

Russian energy giant Gazprom said the reduction in deliveries through the Nord Stream 1 gas pipeline was due to a planned shutdown of a few days for maintenance work. It is supposed to reopen on Saturday.

— Chris Liakos, Anna Cooban and Manveena Suri contributed to this report.

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