The Group of Seven (G7) nations are set to announce an effort to pursue a price cap on Russian oil, US officials said Monday, though there is not yet a hard agreement on curbing what is a key source of revenue for Vladimir Putin’s war in Ukraine, according to Bloomberg.
Russia’s war and limiting its profits from rising energy prices have been the main topics of discussion so far for leaders gathered for three days in the Bavarian Alps. Bloomberg News reported Sunday that the G7 is discussing a price cap and that a potential mechanism would work by imposing restrictions on insurance and shipping.
Negotiators especially those from the US and Italy are seeking a system that limits the flow of money to Russia while allowing oil’s availability to large buyers, like China and India, in order to avoid further price shocks.
Yet the details of how a price cap would be implemented or what level it would be set are not expected to be resolved at the gathering. Instead, leaders will direct finance ministers to work on figuring out the details in the weeks and months ahead, a senior Biden administration official said.
A political agreement to explore the option has been agreed, so it will be mentioned as an idea in the final communique, according to a G7 official.
The US has suggested the cap could work by applying restrictions on insurance and other services needed to transport Russian oil.
The mechanism would allow oil to be shipped if it’s sold below an agreed threshold. Such an approach would require the European Union to rework sanctions that were only agreed last month after weeks of negotiations.
Western sanctions have hit Russia’s economy hard and the new measures are aimed at further depriving the Kremlin of oil revenues. G7 countries will work with others – including India – to limit the revenues that Putin can continue to generate, the according to the U.S. official, Reuters reports.