The Group of Seven (G7) and Australia have joined the European Union in establishing a $60 per barrel price restriction on Russian oil. The countries claim that this will aid them in their efforts to limit Russia’s main source of funding for the war in Ukraine while averting a rise in world prices.
On December 2, EU ambassadors brokered a compromise for the $60 per barrel price restriction on Russian seaborne oil after several nations complained that the price was not low enough.
Although EU members still need to accept the decision, it is anticipated to be implemented. By December 5, when an EU embargo on Russian oil supplied by sea and a prohibition on insurance for such shipments take effect, Europe was required to set the cap.
The price cap, which was driven by the G7, “will help us achieve our goal of restricting [Russian President Vladimir] Putin’s main source of revenue for his illegal war in Ukraine while simultaneously preserving the stability of global energy supplies,” according to U.S. Treasury Secretary Janet Yellen in a statement.
According to Yellen, the price cap “will instantly cut down Putin’s most significant source of revenue.”
The coalition of nations’ declaration is the result of months of labor, and Yellen praised “the hard work of our partners in attaining this goal.”
The accord was reached following a frenzy of last-minute negotiations during which Poland attempted to hold up the agreement by lowering the cap as far as possible. After deliberating for more than 24 hours, Warsaw eventually backed down late on December 2.
According to a joint G7 coalition statement, the group was “prepared to review and revise the maximum price as needed” while taking market developments and potential effects on coalition members and low- and middle-income nations into consideration.
The Russian crude oil price cap will function by preventing shippers and insurance firms from handling cargo unless it is sold at or below the price cap.
The G7 nations hold the majority of the world’s shipping and insurance companies, giving them the power to set the price cap and make it challenging for Moscow to sell its oil for a higher price.
