G7 leaders at a summit in Germany have decided to work on setting a price cap for Russian oil, a US official said on Tuesday.
The G7 includes Germany, France, the United Kingdom, Italy, the United States, Canada and Japan.
G7 leaders will urge ministers to consult urgently with third countries and the private sector to work on setting a price cap for Russian oil, a US official told reporters.
A formal announcement of such a decision is expected in the final communiqué of the summit.
The goal of the US-led plan is to deprive the Kremlin of an important source of revenue and bring Russia’s oil prices down, Jake Sullivan, the national security adviser to US President Joe Biden, told reporters on Monday.
Although the West has already imposed several rounds of sanctions on Russia for its invasion of Ukraine, sanctions on the oil sector would have the greatest economic impact.
Energy exports are Russia’s biggest source of profit, and Western countries are heavily dependent on oil and gas imports.
Setting a price cap would mean that countries would continue to import the energy they need from Russia but would refuse to pay more than a certain price. Theoretically, this would reduce inflationary pressures in the West and at the same time reduce Russia’s profits.
The West hopes that Moscow will have no choice but to agree, because it desperately needs oil revenues.
However, there are important unanswered questions about the unity of consumer countries and Russia’s position: will Moscow really make concessions or will it cut off energy supplies to Europe?
Salivan said that the main obstacle to the plan was not the readiness to implement it, but the solution of complex logistics problems and technical aspects.
One way for the Allies to achieve price cuts is to restrict Russian oil exporters’ access to financial services or insurance companies unless they can demonstrate compliance with the lowest price.
European Council President Charles Michel announced on Sunday that the European Union (EU) would discuss the proposal, but stressed that there were many obstacles to it.
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