By Habeeb Adamu
The industrialized powers of the G7 said on Friday they would “urgently” move towards putting in place a price cap on Russian oil imports to prevent Moscow from raking in huge profits from the soaring energy prices, a major source of funding for its war in Ukraine.
Finance ministers from advanced countries in the Group of Seven said in a statement that they would “work urgently to finalize and implement” the measure without specifying the level of the cap.
Households across the continent bore the brunt of rising energy prices as governments came under pressure to ease the pain of the resulting high inflation.
“Russia benefits economically from the uncertainty on the energy markets caused by the war and makes big profits from the export of oil and we want to counter this decisively,” said Christian Lindner, German Minister of Foreign Affairs. Finance, during a press conference.
Lindner said the G7 countries wanted to “limit Russia’s revenue and reduce the economic damage to our societies.”
The purpose of the oil export price cap was “to stop an important source of financing the war of aggression and to contain the rise in world energy prices”, he added.
The G7 sought to form a “broad coalition” of support for the oil price cap to “maximise” the measure’s effectiveness, the finance ministers said.
The initial price cap would be set “at a level based on a range of technical inputs”, they said, adding that its effectiveness would be “closely monitored”.
In late June, G7 leaders agreed to work to implement the crude sales cap to deplete Moscow’s war chest and drive down global energy prices.
Moreover, a G7 official explained in July that the maximum price would remain above the cost of production, so it would not make economic sense for Moscow to deny oil to importing countries.
Many countries are ready to accept the cap, which is expected to be a key talking point for leaders at the G20 summit in Bali on November 15-16.
Ahead of Friday’s decision, Kremlin spokesman Dmitry Peskov issued a stark warning, saying the adoption of a price cap “would lead to significant destabilization of oil markets.”
Moscow “simply would not supply oil and petroleum products to companies or states that impose restrictions,” Russian Deputy Prime Minister Alexander Novak warned Thursday, according to Russian news agencies.
“Interference in the market mechanisms of such an important industry…will only destabilize the oil industry, the oil market. And for that, European and American consumers will be the first to pay,” he said.
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