G-7 to discuss proposed Russian oil price cap on Friday, White House says

A Ukrainian soldier drives a tank, amid Russia's ongoing invasion of Ukraine. PHOTO: AFP

WASHINGTON - Finance ministers from the Group of Seven (G-7) club of wealthy nations will discuss the Biden administration's proposed price cap on Russian oil when they meet on Friday, the White House said.

"This is the most effective way, we believe, to hit hard at Putin's revenue and doing so will result in not only a drop in Putin's oil revenue, but also global energy prices as well,"said White House spokeswoman Karine Jean-Pierre at a briefing for reporters on Wednesday.

"It will be discussed further this week at the G-7 finance ministers meeting... happening on Friday."

G-7 leaders are discussing how to craft such a price cap and have considered other alternatives, including blocking the transportation of Russian oil.

The G-7 is made up of Britain, Canada, France, Germany, Italy, Japan, and the US.

Many countries have imposed sanctions on Russia following its invasion of Ukraine, which Moscow calls a "special military operation," but key oil consumers China and India have stepped up imports of discounted Russian barrels to record levels.

Despite Russia's oil exports hitting their lowest levels since last August, its export revenue in June increased by US$700 million (S$980 million) month on month due to higher prices, 40 per cent above last year's average, the International Energy Agency said last month.

Western leaders have proposed addressing that through an oil price cap to limit how much refiners and traders can pay for Russian crude - a move Moscow says it will not abide by and can thwart by shipping oil to states not obeying the price ceiling.

Some traders and oil market analysts have expressed doubts a price cap would work as Russia has found ways to ship its oil to Asia without the use of Western ship insurance. Moscow could also stop exports of some oil altogether, leading to a further spike in energy prices.

G-7 members have scrambled to find ways to plug energy shortages and tackle soaring prices while sticking to their climate commitments amid the tensions with Russia. REUTERS

Remote video URL

Join ST's Telegram channel and get the latest breaking news delivered to you.