G7 to ‘urgently’ implement Russian oil price cap and encourage ‘broad coalition’ of countries to participate in initiative to deprive Moscow of some of its windfall from energy sector, statement says Friday.
“The price cap will be set at a level based on a series of technical data and will be decided by the entire coalition before its implementation”, write the seven countries in the statement, ensuring that future prices would be “communicated publicly in a clear and transparent manner”. The decision, which must be implemented “urgently” according to the G7 declaration, was finalized during a virtual summit of finance ministers from the seven most industrialized countries (United States, Germany, France, United Kingdom, Canada, Japan).
“Russia benefits economically from the uncertainties linked to the war on the energy markets,” German Finance Minister Christian Lindner told the press after the meeting. “Russia is currently making high profits from the export of raw materials like oil and we want to oppose this resolutely,” he argued. “The price cap is specifically designed to reduce Russia’s revenue and its ability to finance its war of aggression, while limiting the impact of Russia’s war on the world”, especially “weak countries”. income,” the G7 explained in its statement.
What about China and India?
Concretely, Russia would sell its oil to these countries at a lower price than the one at which it sells it today, but which would remain higher than the production price, so that it has an economic interest in continuing to sell it to them, and so that it does not cut its deliveries.
The challenge is to rally as many countries as possible because the price cap will only work if all the major buyer countries participate, underline the experts, who point in particular to the role of China and India. To this end, the G7 “invites all countries to give their opinion on the design of the price cap and to implement this important measure”, in order to establish “a broad coalition” to maximize the effect of the measure. .
The leaders of the G7 countries, at the instigation of Washington, launched work at the end of June aimed at developing the complex mechanisms of this cap, which should be based on a ban on insurers and reinsurers from covering the maritime transport of Russian oil.