G7 Moves To Price-Cap Russian Oil, Woo Importers
As part of measures to further deepen the sanctions against Russia, the G7 leaders have agreed to study ways to put a cap on the price of Russian oil sold internationally, and currently shopping for support from “like-minded” nations.
“We invite all like-minded countries to consider joining us in our actions,” G7 said in a communiqué cited by Reuters yesterday.
The Group of Seven is an inter-governmental political forum consisting of advanced economies, namely, Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. In addition, the European Union is a ‘non-enumerated member’.
The price cap on Russian oil was one of the main items on the G7 agenda during this week’s meeting, and initial reports from the event suggested the leaders of the world’s biggest economies would produce an actual plan for capping prices.
Reports say they may be delaying these actions until they get more importers on board.
Financial Times reported yesterday that the G7 leaders are trying to ensure that, “Russia does not exploit its position as an energy producer to profit from its aggression at the expense of vulnerable countries.”
Bloomberg said the U.S. Treasury Secretary, Janet Yellen is said to be leading the pressure group urging European countries to join the oil price cap to reduce Russia’s income from energy exports without substantially affecting the availability of oil.
Quoting a Treasury statement, the news agency said Yellen met with the finance minister of Cyprus—a major maritime transport hub—earlier this week, during which they “spoke about the goal of placing a price limit on Russian oil to deprive the Kremlin of revenue to finance their war in Ukraine while mitigating spillover effects for the global economy.”
According to energy analysts, however, effecting a price cap that will have the desired effect would be tricky.
Citing Tamas Varga from PVM, Reuters noted in a report from earlier yesterday that the fact that such a cap is being discussed shows that banning Russian oil outright has had the opposite effect of what it sought to do.