G7’s Price Cap on Russian Oil

In Context

• The Group of Seven countries is working to cap the price of Russian oil in an attempt to limit Moscow’s ability to fund its invasion of Ukraine.

About

• Russian crude is priced at a discount and the G7 and EU want to cap the price, to keep down Russian oil revenue.
• G7 and EU countries will decide a ‘price’ for Russian Oil and petroleum buyers would make “attestations” to providers saying they bought Russian petroleum at or below the cap. If they don’t adhere to it, they will be denied services including insurance, finance, brokering and navigation to oil cargoes priced above the cap.
• The G7 wealthy nations – the United States, Japan, Germany, Britain, France, Italy and Canada – and the EU are hammering out details of the plan. The G7 wants to enlist other countries, including India and China, which have been snapping up heavily-discounted oil from Russia since its Feb. 24 invasion of Ukraine.

 Issues

• There is no consensus on what should be the cap among G7+EU countries. Russia may withhold exports to countries that enforce the cap, and fears about the threat could cause petroleum markets to rise.

Source: IE