G7 finance chiefs see moving ahead with plan to cap Russia’s oil price

Finance ministers in the Group of Seven are expected on Friday to cement plans to introduce a price cap on Russian oil, aimed at cutting revenue for Moscow’s war in Ukraine but maintaining crude flow to avoid price spikes, G7 said -Officer.

Ministers from the Club of Wealthy Industrial Democracies are to meet virtually and are expected to issue a communiqué outlining their implementation plans.

Finance Minister Paschal Donohoe will attend the meeting as Chair of the Eurogroup of Finance Ministers.

“An agreement is likely,” said a European G7 official, adding that it was unclear how many details would be disclosed, such as the level of the per-barrel price cap, above which compliant countries will refuse insurance and financing for Russian crude would cargoes of oil products.

British Finance Minister Nadhim Zahawi said in Washington on Thursday he was confident G7 finance ministers will “make a statement that means we can move at pace to get this done”.

“We want to get this cap on the oil price over the limit,” he said at a think tank event in Washington a day after discussing the cap with US Treasury Secretary Janet Yellen.

Despite Russia’s falling oil export volume, its oil export earnings rose $700 million in June from May as prices were pushed up by the war in Ukraine, the International Energy Agency said last month.

Western leaders agreed in June to consider a cap to limit how much refiners and traders can pay for Russian crude — a move Moscow says it won’t comply with and by shipping oil to states , which do not comply with the price cap.

White House spokeswoman Karine Jean-Pierre declined to comment on the G7’s plans for the price cap, saying she “does not want to prejudge this meeting”.

The G7 consists of Great Britain, Canada, France, Germany, Italy, Japan and the United States. Some officials on the bloc have said the cap needs broader support and have questioned whether it can succeed without the involvement of big oil consumers China and India, who are unlikely to back the plan.

But other G7 officials have said China and India have expressed interest in buying Russian oil at an even lower price in line with the cap.

The cap would rely heavily on London-brokered ship insurance, which covers about 95 per cent of the world’s tanker fleet, and refusal to finance cargoes priced above the cap.

However, analysts say alternatives can be found to circumvent the cap and market forces could render them ineffective

Another G7 official said that ahead of the European Union’s planned imposition of a regional embargo on Russian crude on March 5.

The US Treasury Department has raised concerns that the EU embargo could spark a scramble for alternative supplies and push global crude prices to as high as $140 a barrel, and has been touting the price cap to stem the flow of Russian crude since May to maintain.

Russian oil prices have risen in anticipation of the EU embargo, with Urals crude trading at a $18-$25 discount per barrel to benchmark Brent crude, compared to a $30-$40 discount earlier this year.

https://www.independent.ie/business/world/g7-finance-chiefs-seen-advancing-russian-oil-price-cap-plan-41955379.html G7 finance chiefs see moving ahead with plan to cap Russia’s oil price

Fry Electronics Team

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