Oil price shock: G7 aim to impose Russian price cap in December – ‘Align with EU!’ | City & Business | Finance

The G7, which is made up of the United States, United Kingdom, Canada, Japan, Germany, France, and Italy, announced last month it would consider imposing a price cap against Russian crude. However, an unnamed official has since revealed the world’s richest economies could introduce a price cap mechanism to curb Moscow’s ability to raise oil revenue which Vladimir Putin could use to finance his invasion of Ukraine.

The official said: “The goal here is to align with the timing that the EU has already put in place.

“We want to make sure that the price cap mechanism goes into effect at the same time.”

Efforts have been made to bring China and India onboard.

However, the two Asian nations have already been buying Moscow’s oil at a discounted market price.

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The G7 official added: “We’ve already heard from a number of Asian countries that are interested in either joining the coalition or better understanding the price point at which the price will be set in order to strengthen their hand in their negotiations with the Russians over future contracts.”

The G7 want the price on Russian crude to be set by members of the buyers’ cartel at a level above Russian production costs, so as to provide an incentive for the Kremlin to keep pumping, but much below the current high market prices.

This could put pressure on Putin to choose between agreeing to lower revenue or having almost no revenue at all.

The United States made similar claims last week when Joe Biden’s deputy treasury secretary Wally Adeyemo confirmed Washington hopes to see a global price cap on Russian oil by the end of the year.

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Britain unveiled similar plans to “choke off a valuable source of income” to the Kremlin back in March.

Business Secretary Kwasi Kwarteng said: “Unprovoked military aggression will not pay and we will continue to support the brave people of Ukraine as they stand up to tyranny, building on our existing sanctions that are already crippling Putin’s war machine.

“We have more than enough time for the market and our supply chains to adjust to these essential changes.

“Businesses should use this year to ensure a smooth transition so that consumers will not be affected.”