G7 countries agree to limit Russian oil prices

Finance ministers of the G7 countries (USA, Canada, UK, Japan, Germany, France and Italy) agreed to impose a limit on the price of Russian oil, the corresponding statement published on the UK Treasury website. It is clarified that insurance and financing for carriers of Russian oil at prices exceeding the established “threshold” will be prohibited. The new measure is expected to take effect in December.

“Today we reaffirm our joint political intent to complete the development and implement a comprehensive ban on services that allow for the sea transportation of oil and oil products of Russian origin around the world – the provision of such services will be allowed only if oil and oil products are purchased at prices equal to or below the limit, which is determined by a broad coalition of countries,” the report said.

It is specified that with the help of this mechanism, officials expect to maintain the supply of oil and oil products from Russia, while reducing its income. At the same time, Russia’s influence on world energy prices will be limited.

Earlier, the Financial Times newspaper reported that the heads of the finance ministries of the G7 countries will today approve the introduction of a plan to limit prices for oil and oil products from Russia. According to it, a ban will be introduced on financing and insurance of Russian oil supplies if they are carried out at a price higher than that agreed upon by the G7 member countries. For oil supplies, it will come into effect on December 5, when the EU embargo on Russian oil supplies comes into force, and for oil products, on February 5, 2023. In this way, European officials want to keep the supply of products from Russia, while reducing its oil revenues.

In response to such a decision, the press secretary of the President of Russia Dmitry Peskov said that when a price limit is set, oil and oil products will be supplied in other directions – to countries that work on market conditions. According to Deputy Prime Minister Alexander Novak, the idea of ​​limiting the price of Russian oil is “completely absurd” and could destabilize the entire industry, causing prices to rise and EU and US consumers to suffer.

The talks of the G7 countries on limiting prices for Russian oil became known in July. As Bloomberg wrote then, Western countries are discussing a range from $40 to $60 per barrel, which will be higher than the cost of oil production, i.e. Russia will have an incentive to continue it. At the same time, the administration of US President Joe Biden considers the $40 limit too low and could lead to another jump in oil prices due to a reduction in Russian supplies.

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