G7 countries agree to price cap for Russian oil.

G7 countries agree to price cap for Russian oil.
G7 countries agree to price cap for Russian oil.

The G7 on Friday agreed to a price cap for Russian oil. In this way an attempt is made to curb the Russian profits on the sale of the black gold and thus exhaust the war chest of Moscow.

The finance ministers of the Group of Seven (G7), the intergovernmental forum of seven leading industrial states, agreed on Friday that from December 5 they will refuse to buy oil from Russia if it is sold at a price higher than that. than a mutually agreed price ceiling.

“The price cap is specifically designed to reduce Russia’s revenues and the country’s ability to finance its war. At the same time, the measure should depress global energy prices, especially for low- and middle-income countries,” the G7 said in a statement.

It is not yet known exactly how high the ceiling will be. That will depend on a “wide range of technical factors” and is decided jointly by the countries.

Energy analysts were according to CNBC however, highly skeptical and warned that the policy could backfire if key consumers such as China and India are not involved.

Russian Profits

In June, the Kremlin made $700 million more from oil than in May, the International Energy Agency (IEA) reported. That is despite the fact that Russia delivered 250,000 fewer barrels of crude oil every day during that month. The country then exported 7.4 million barrels per day, the lowest output since August 2021.

Destabilization of global market

Leading up to Friday’s announcement, Moscow warned that it will stop selling oil to countries that operate the price cap and that imposing a cap would significantly destabilize the global oil market.

“We simply will not supply oil and petroleum products to such companies or states that impose restrictions,” Deputy Prime Minister Alexander Novak told reporters from the state news agency on Thursday. TASS.

According to the IEA, flows of Russian crude and other oil products to the United States, the United Kingdom, the European Union, Japan and South Korea have fallen by nearly 2.2 million barrels a day since the war in Ukraine began.

However, much of this decline has been diverted to other markets, further replenishing Moscow’s treasury. For example, Brazilian President Jair Bolsonaro said he will not comply with sanctions imposed by the West and is considering importing even more Russian oil.

gas price

That is why the West wants to take other measures in addition to a price ceiling. For example, the EU will introduce an embargo on Russian oil from December and the import of oil products will also be restricted in February.

On Friday, Ursula von der Leyen, president of the European Commission, also expressed her support for a price cap for Russian gas. “The time is right for such measures,” she said during her visit in Marnau, Germany. It is not yet clear exactly how a price ceiling in the case of gas would work. Next Friday, EU energy ministers will meet for an emergency meeting on the increased prices.

The article is in Dutch

Tags: countries agree price cap Russian oil

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