According to the Reuters news agency, the G-7 agreed to set a ceiling on Russian oil prices in order to cut the Kremlin’s revenues and contain rising energy prices.
Australia and the European Union also supported capping Russian oil prices.
For weeks, U.S. officials and their G7 counterparts have been in intense negotiations over an unprecedented plan to cap shipping oil prices, set to take effect December 5 next year, to enforce EU and U.S. sanctions aimed at limiting Moscow’s military capabilities.
A G7 source told Reuters, without revealing his identity: “The coalition has agreed that the top price is fixed and reviewed regularly instead of discounting the overall price index.”
He then continued, “This will increase market stability and make compliance easier to reduce the burden on decision makers.”
The imposition of a price ceiling on Russian oil is mainly aimed at reducing the Kremlin’s revenues and containing the rise in energy prices.
Higher energy prices helped soften the impact of Western sanctions on the Russian economy and finance Moscow’s war in Ukraine.
A second source familiar with the discussions said the alliance was concerned that a common floating rate could allow Russian President Vladimir Putin to manipulate the mechanism by cutting supplies.
Putin can benefit from the floating price system in general, because the price of oil in his country will also rise if Brent oil rises (due to reduced oil supplies from Russia, one of the largest oil producers in the world).
The source said the downside of the agreed-upon flat rate system is that it would require more coalition meetings and bureaucratic hassle to revise it regularly.
US Treasury Secretary Janet Yellen and other G7 officials believe that price caps due to begin Dec. 5 for crude oil and Feb. 5 for other petroleum products will cut Russia’s funding without reducing supplies to consumers.
Russia has said it will refuse to supply oil to countries that set a price ceiling.
Delivery services are asking for more details about the G7 plan, which should go into effect within a month.
Fixed price caps could allow insurers to be more confident in renewing contracts and entering into new ones without fear of price adjustments by countries buying Russian oil.
There were no immediate comments from the Treasury Department or the embassies of members of the coalition that includes the wealthy G7, the European Union and Australia.
Separately, the Wall Street Journal reported on Friday that the United States and its allies have agreed to more details on Russian oil sales that will face the cap.
In addition, the G7 countries called on Russia to extend an agreement allowing the safe passage of grain shipments from Ukraine, Agence France-Presse reported Friday, citing a senior US State Department official.
“Everyone agreed on the need to expand the Black Sea Grain Initiative,” an official, who asked not to be named, said on the sidelines of a G7 foreign ministers meeting in Münster, Germany.
He explained that the G7 countries support, in particular, the efforts of UN Secretary General António Guterres “to persuade Russia to extend the agreement.”
Grain exports from Ukrainian ports resumed on Thursday after Russia returned to an agreement at the end of July in Istanbul.
This agreement, which expires on November 19, allowed the export of ten million tons of grain and other agricultural products as of August 1, alleviating a global food crisis caused by the war in Ukraine.
The G7 foreign ministers discussed at length their enduring support for Ukraine during the meeting, which took place on Thursday and Friday, including through the “G7 coordination mechanism to repair and rebuild the energy infrastructure” damaged by Russian blows. .