The Group of Seven finance ministers agreed to put a ceiling on Russian oil prices, in a move aimed at reducing the revenues that fund Moscow’s war on Ukraine while keeping crude flowing to avoid price hikes, but Russia said it would halt sales to countries that impose the cap.
Ministers of the Club of Wealthy Industrial Democracies confirmed their commitment to the plan after an online meeting, but said the price ceiling level would be set later “based on a set of technical inputs” that would be agreed upon by the coalition of countries that would implement it.
“Today, we confirm our common political intention to finalize and implement a comprehensive ban on services that enable the maritime transport of crude oil and petroleum products of Russian origin worldwide,” the G7 ministers said.
The provision of shipping services, including insurance and financing, will only be permitted if Russian oil shipments are purchased at or below the price level “set by the broad coalition of countries committed to the price cap and its application.”
Oleg Ustenko, chief economic adviser to Ukrainian President Volodymyr Zelensky, welcomed the development and said he expected the price range to be between $40 and $60.
He told Reuters: “This is great. That’s exactly what we need” to cut Russia’s revenue, and Brent crude futures rose 66 cents to $93.02 a barrel on Friday.
Zelensky himself said in a video speech that the price of Russian natural gas exports should also be capped.
A senior US Treasury official told reporters that the alliance will set a specific dollar price for Russian crude and two other prices for petroleum products – not discounts on global market prices – provided that the price level is reviewed as needed.
The ministers said they would work to finalize the details on time and disclose them by Dec. 5, when new EU sanctions begin banning Russian oil imports.
As for German Finance Minister Christian Lindner, who is the current head of the G7 finance ministers, he said, “This cap on Russian oil export prices is intended to reduce the revenues of (Russian President Vladimir) Putin and close an important Source of financing the war of aggression. At the same time, we want to curb the rise in global energy prices. This will reduce inflation globally.”