G7 price cap on Russian oil designed to choke war funds
The seven finance ministers from Canada, France, Germany, Italy, Japan, the UK and US did not provide a proposed figure for the cap or give details for when the limit would be agreed.
Meanwhile, Russia’s gas giant Gazprom on Friday announced that the Nord Stream 1 pipeline to Germany would remain closed.
The G7 said its move would halt energy price rises and inflation caused by the Ukraine war.
The price cap’s level per barrel has yet to be agreed and will be based on “a range of technical inputs” to be determined by the countries implementing it, the ministers said in a statement.
“The price cap is specifically designed to reduce Russian revenues and Russia’s ability to fund its war of aggression, whilst limiting the impact of Russia’s war on global energy prices, particularly for low- and middle-income countries, by only permitting service providers to continue to do business related to Russian seaborne oil and petroleum products sold at or below the price cap,” the G7 text said.
It is hoped the cap aligns with the European Union’s ban on Russian oil imports to the 27 members from December.
UK finance minister Nadhim Zahawi said: “Since Putin’s brutal and unprovoked invasion of Ukraine, the UK and our allies have imposed hugely damaging sanctions on the Kremlin war machine, pushing the Russian economy into a deep recession and putting the majority of Russia’s US$640 billion foreign exchange reserves beyond use.”
The chancellor added: “We are united against this barbaric aggression and will do all we can to support Ukraine as they fight for sovereignty, democracy and freedom.”
The G7 called on other nations importing Russian oil to join the cap. The ministerial statement said: “We seek to establish a broad coalition in order to maximise effectiveness and urge all countries that still seek to import Russian oil and petroleum products to commit to doing so only at prices at or below the price cap.”
It is unclear if China, India and other major players will participate, raising questions about how effective the G7 cap will be without global participation.
Keeping Europe moving this winter is concentrating minds. Picture credit: Flickr