G7 to implement price cap on Russian oil imports
Sep 02, 2022
Berlin [Germany], September 2 : The Group of Seven (G7) nations have promised to move towards a price cap on Russian oil, saying it would hamper the country's war efforts in Ukraine and speed up the deterioration of its economy.
"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 USD 640 billion foreign exchange reserves beyond use," said UK Finance Minister Nadhim Zahawi.
The G7 said the price cap is specifically designed to reduce Russian revenues and Russia's ability to fund its war.
"This measure would thus build on and amplify the reach of existing sanctions, notably the EU's sixth package of sanctions, ensuring coherence through a strong global framework," the G7 said in a statement after its Finance Minister and Central Bank Governors' meeting on September 02.
The grouping said they commit to urgently work on the finalisation and implementation of this measure in thier own jurisdictions through thier respective domestic and legal processes.
"We acknowledge that, for the EU, unanimity among the 27 EU Member States is required. We aim to align implementation with the timeline of related measures within the EU's sixth sanctions package," the statement said.
"The initial price cap will be set at a level based on a range of technical inputs and will be decided by the full coalition in advance of implementation in each jurisdiction," they added.
The member of the powerful grouping also said the price cap will be publicly communicated in a clear and transparent manner. The price cap's effectiveness and impact will be closely monitored and the price level revisited as necessary.
The EU's sixth sanctions package was adopted on June 3. It prohibited EU operators to insure or finance the transport, in particular through maritime routes, of crude oil or petroleum products from Russia to third countries.
Earlier, Russian Deputy Prime Minister Alexander Novak condemned the idea of a price cap on Russian oil as absurd, warning that Moscow would not deliver oil and oil products to countries that support the decision.
Over the past months, the sanctions imposed by the West on Russia in retaliation for its military operation in Ukraine sent food and energy prices soaring, triggering record-high inflation in some countries.
