The G7 countries are poised to agree a price cap on purchases of Russian oil to limit the Kremlin’s earnings from exports and ability to fund its war against Ukraine.
Finance ministers from the US, UK, France, Germany, Italy, Canada and Japan will formally give their political support for the move at a virtual meeting on Friday afternoon, according to five officials briefed on the talks.
The cap would be implemented at the same time as the EU’s own embargoes on Russian oil imports. Two of the officials said the measure would take effect on December 5 for crude and February 5 for refined products.
The price cap has the support of the European Commission but needs backing from EU member states. Officials have also said that for it to be most effective, it will require the support of third countries who buy large quantities of Russian oil, such as India.
“A price cap . . . makes sure that every country can get the lowest price possible, and that’s good for the world,” said James O’Brien, sanctions co-ordinator at the US state department.
Energy prices have soared since Russia’s full-scale invasion of Ukraine in February, which was followed by a raft of western sanctions against Moscow and moves by countries to stop buying Russian oil. The price rises have given the Kremlin a windfall in export earnings.
The G7 in June agreed to explore ways of limiting Moscow’s revenues without driving up global prices.
Since then, US officials have worked to find a consensus within the G7 on the outlines of the cap, and how it would be implemented. Oil industry executives and some G7 government officials have voiced scepticism over how the cap would work and whether enough countries would adopt it.
Russia on Thursday threatened to stop selling oil to any country that adopted a price cap mechanism.
Kremlin spokesman Dmitry Peskov said on Friday the move would be an “absurd decision” and would “lead to a significant destabilisation of oil markets,” according to Interfax.
When asked about that threat, O’Brien said: “Russia needs to keep its energy machinery running and needs the money. What it chooses to do is its decision.”
Additional reporting by Max Seddon in Riga
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