G7 countries agree to cap Russian oil prices

Finance ministers from the G7 group of the United States, Japan, Canada, Germany, France, Italy and the United Kingdom said they would ban the provision of “services that enable the global maritime transport of crude oil and petroleum products of Russian origin”. “The price cap has been exceeded. This may prevent insurance and financing for oil transportation.”

The top price will be set by a “broad coalition” of countries, they said in a joint statement. will come into effect at the same time as the sanctions of

Russia had already threatened to retaliate by banning oil exports to countries enforcing price caps.

Deputy Prime Minister Aleksandr Novak told reporters on Thursday: “We will not supply oil or petroleum products to companies or states that impose restrictions. We do not intend to work uncompetitively,” the state-run TASS news agency reported. ‘ said.

For months, the Biden administration has been calling on governments to introduce price caps. While the West has already licensed many Russian energy exports, Moscow continues to make billions of dollars a month by diverting oil to China and Asia.
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“Price caps are specifically designed to reduce Russia’s revenues and Russia’s ability to fund wars of aggression, while limiting the impact of Russia’s wars on global energy prices, especially in low- and middle-income countries. has been done,” said the G7 finance ministers.

However, this countermeasure still requires work and is very complex to manage. It remains to be seen when, how much and how Russian oil prices will be capped. It also needs broader international support to be effective.

“[We] We ask all countries intending to import Russian oil and petroleum products to commit to importing only at prices below the ceiling,” the finance minister said.

Oil prices have fallen about 18% since early July on expectations that the recession will reduce demand, but they are still about 20% higher than they were a year ago.

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

According to TASS news agency, Novak called the proposal to impose the limit “totally ridiculous” and said it could destroy global oil markets.

“Such an attempt would only destabilize the oil industry, the oil market,” he said.

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According to the International Energy Agency, flows of crude oil and other petroleum products to the US, UK, European Union, Japan and South Korea have fallen by about 2.2 million barrels per day since the start of the war in Ukraine.

However, two-thirds of this decline has been diverted to other markets, benefitting Moscow’s coffers. Export earnings in July were about $19 billion, according to the IEA.
Russia’s control of much of the world’s energy supply remains a major problem Six months after the invasion of Ukraine. This week, Russia temporarily halted the supply of natural gas to the region via a vital pipeline, cutting off all supplies to the French utility, causing European inflation to hit a record high of 9%. The problem that reached was exacerbated.

Russian state-owned energy giant Gazprom said the reduction in deliveries through the Nordstream 1 pipeline was due to a planned shutdown for several days for maintenance work. It is expected to reopen on Saturday.

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


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