G7 finance ministers discussed on Friday, September 2, 2022, the response to Russia’s war of aggression against Ukraine and the war’s damaging impact on the world economy, and agreed to limit prices for Russian oil imports.
“We confirm our joint political intention to finalize and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally – 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 plan would effectively allow buyers of Russian oil at a capped price to continue receiving critical services such as tanker financing and insurance.
It notes that the price cap is specifically designed to reduce Russia’s revenues and ability to finance its war of aggression while limiting the impact of Russia’s war on global energy prices. It is indicated that this measure will be based on existing sanctions, in particular on the sixth package of EU sanctions.
“We seek to establish a broad coalition in order to maximize effectiveness and urge all countries that still seek to import Russian oil and petroleum products to commit to doing so only at prices at or below the price cap. We reaffirm our own measures to phase out Russian oil and products from our domestic markets and underscore that the price cap measure aims to relieve pressure on global oil prices and support oil-importing countries globally by enabling continued access to Russian oil at or below the price cap for countries that continue such imports.”
The initial price cap will be set at a level based on a range of technical data and will be decided by the entire coalition before implementation in each jurisdiction. The threshold price will be publicly announced in a clear and transparent manner.