G7 finance chiefs agree Russian oil price cap but level not yet set

G7 finance chiefs agree Russian oil price cap but level not yet set
G7 finance chiefs agree Russian oil price cap but level not yet set

September 2 (Reuters) – Group of Seven finance ministers agreed on Friday to impose a cap on Russian oil prices aimed at cutting Moscow’s war revenue in Ukraine while avoiding price spikes, but Russia said it would stop oil sales to countries that impose it.

Ministers from wealthy G7 democracies confirmed their commitment to the plan after a virtual meeting. They said, however, that key details, including the level per barrel of the price cap, would be determined later “based on a range of technical inputs” to be agreed by the coalition of countries implementing it.

“Today we confirm our common political intention to finalize and implement a comprehensive ban on services that enable the maritime transport of crude oil and petroleum products of Russian origin around the world,” the G7 ministers said. .

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The provision of Western-dominated shipping services, including insurance and finance, would only be allowed if Russian oil cargoes are purchased at or below the price level “determined by the broad coalition of joining countries and implementing the price cap”.

A senior US Treasury official told reporters that the coalition would set a specific dollar price limit for Russian crude and two others for petroleum products – not global market price discounts – and that the price level would be reviewed if necessary.

“This price cap on Russian oil exports is designed to reduce Putin’s income, thereby shutting down an important source of funding for the war of aggression,” said German Finance Minister Christian Lindner, the current finance chairman. of the G7. “At the same time, we want to curb the rise in world energy prices. This will minimize inflation globally.”

OIL CUT

The Kremlin responded to the G7 statement by saying it would stop selling oil to countries enforcing the price cap, saying it would destabilize global oil markets.

“We simply won’t cooperate with them on non-market principles,” Kremlin spokesman Dmitry Peskov told reporters. [nL8N3091TK]

The Treasury official said Russia would have no choice but to sell oil at discounted prices in line with the cap because India, China and other countries outside the coalition will still want to buy oil. oil at the best possible price and alternative insurance will be considerably more expensive. .

“We have received positive signals from other countries, but no firm commitments yet,” a senior G7 source said of efforts to recruit other countries into the coalition. “We wanted to send a signal of unity to Russia and also to countries like China.”

The G7 announcement had little effect on benchmark crude prices, which rose ahead of an OPEC+ discussion of production cuts on Monday amid weaker demand.

Ministers said they would work to finalize the details, through their own national processes, with the aim of aligning them with the start of European Union sanctions that will ban imports of Russian oil into the bloc. from December.

The G7 is made up of Britain, Canada, France, Germany, Italy, Japan and the United States.

Enforcement of the cap would depend heavily on refusing London-negotiated marine insurance, which covers around 95% of the world’s tanker fleet, and financing cargoes priced above the cap. But analysts say alternatives can be found to circumvent the cap and market forces could render it ineffective

Despite Russia’s lower oil export volumes, its oil export revenue in June was up $700 million from May due to prices pushed up by its war in Ukraine, it said. the International Energy Agency last month.

The G7 finance ministers’ statement follows their leaders’ decision in June to explore the cap, a decision Moscow says it will not respect and can thwart by shipping oil to states that do not. not the price cap. Read more

PRICE CONCERNS

The US Treasury has raised concerns that the EU embargo could trigger a rush for alternative supplies, pushing global crude prices up to $140 a barrel, and it is promoting capping prices since May as a way to keep Russian crude in circulation.

Russian oil prices rose ahead of the EU embargo, with Urals crude trading at a discount of $18-25 a barrel to benchmark Brent crude, from a discount of $30-25 a barrel. $40 earlier this year. Read more

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Additional reporting by Jan Strupczewski, Matthias Williams, Steve Scherer, William James, Leigh Thomas, Timothy Gardner, Daphne Psaledakis and Rami Ayyub; editing by Raju Gopalakrishnan and Chizu Nomiyama

Our standards: The Thomson Reuters Trust Principles.

. chiefs of finances agree on ceiling price oil russian but level is not still fixed

. finance chiefs agree Russian oil price cap level set

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