The G7 countries are ready to agree to limit the price of Russian oil to limit the Kremlin’s export earnings and ability to finance the war against Ukraine.
Finance ministers from the US, UK, France, Germany, Italy, Canada and Japan will formally endorse the move at a virtual meeting on Friday afternoon, according to five officials briefed on the negotiations. .
The limit will be implemented at the same time as the EU embargo on Russian oil imports. Two of the officials said the measure would go into effect on December 5 for crude oil and February 5 for refined products.
The price cap has the support of the European Commission but needs support from the EU member states. Officials also said that for the operation to be most effective, it would require the support of third countries that buy large quantities of Russian oil, such as India.
“Price limit. . . making sure that every country can get the lowest possible price, and that’s good for the world,” said James O’Brien, sanctions coordinator at the US state department.
Energy prices have skyrocketed since Russia full-scale invasion of Ukraine in February, followed by a series of Western sanctions against Moscow and moves to stop buying Russian oil. Rising prices have provided the Kremlin with an export income.
G7 in June agreed to explore ways limit Moscow’s revenue without raising global prices.
Since then, US officials have worked to find consensus within the G7 on the outlines of the limit and how it will be implemented. Oil industry executives and some G7 government officials have expressed skepticism about how the limit works and whether enough countries will adopt it.
On Thursday, Russia threatened to stop selling oil to any country that adopts a price cap mechanism.
Kremlin spokesman Dmitry Peskov on Friday said the move would be an “absurd decision” and would “lead to significant destabilization of the oil market,” according to Interfax.
Asked about that threat, O’Brien said: “Russia needs to keep its energy machinery running and needs money. What it chooses to do is for it to decide.”
Additional reporting by Max Seddon in Riga
