G7 finance ministers in Elmau, Germany have called for a price cap on Russian oil. Their goal is to stop Russia from profiting from its war against Ukraine.
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The initial price cap will be calculated and adjusted accordingly, G7 finance ministers said.
US Treasury Secretary Janet Yellen said in a statement the price cap deal will help deliver a major blow to Russia’s finances and hinder its ability in Ukraine.
The price cap helps “our dual goals of putting downward pressure on global energy prices while denying Putin revenue to fund his brutal war in Ukraine,” the statement said.
It was not clear when the price cap would be implemented though the G7 said “we invite all countries to provide input on the price cap’s design and to implement this important measure.”
What did G7 ministers say?
The German Finance Ministry released a joint statement noting that “today we confirm our joint political intention to finalise and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally.”
The statement concluded, “the provision of such services would only be allowed if the oil and petroleum products are purchased at or below a price (‘the price cap’) determined by the broad coalition of countries adhering to and implementing the price cap.”
The G7 ministers said they planned “to align implementation with the timeline of related measures within the EU’s sixth sanctions package.”
Japan’s Finance Minister Shunichi Suzuki said he welcomed the price cap and wanted the agreement implemented soon. Suzuki also told reporters that it could help offset rising energy prices and inflation.
“Implementing a price cap is significant. It’s important to materialize what was agreed quickly,” Suzuki told reporters.
What is behind the deal?
When G7 ministers met in Elmau in June, they agreed to consider measures that would bar imports of Russian oil above a certain level.
US President Joe Biden supports the price caps. Service providers are predominantly located in the EU and the UK and are therefore within the reach of sanctions.
The US Treasury had expressed concerns that a full EU ban on Russian oil would send the price of crude spiking and a scramble for alternative supplies, whereas a price cap would help keep Russian crude flowing.
The US has banned the import of Russian oil, which was small to begin with, whereas the more dependent EU has barred 90% of maritime imports of Russian oil though that is not set to take effect until the end of the year.
ar/wd (AFP, AP, dpa, Reuters)