The G-7 alliance of industrialized nations has agreed to cap the price of imported oil from Russia. Western major economies are alone in capping the country’s oil prices to rein in Russia over global inflation and the war in Ukraine. The alliance decided to make it difficult for Russia to spend on the war in Ukraine.
British media BBC reported on Friday (September 2) that the finance ministers of the G-7 alliance said on Friday that they would impose restrictions on contracts with ‘exchange prices’ higher than the fixed price. Capping the prices of crude and petroleum products will also reduce global fuel prices.
The G-7 alliance says we will stand by Ukraine as long as necessary. The G-7 countries with strong economies are the United States, Japan, Canada, Germany, France, Italy and the United Kingdom. They dominate global trade and the international financial system.
In a joint statement, the finance ministers of the alliance said that a large alliance of countries will determine the maximum price of oil. That will come into effect with the next EU sanctions. The statement said that there will be a ban on imports from Russia by sea in December.
Russia has said it will not sell oil to countries that fix prices. Kremlin spokesman Dmitry Peskov said the countries that would cap prices would not be on the list of countries receiving Russian oil.
The report also noted that major international support would be needed to implement it.
US President Joe Biden’s administration has been pressuring countries to cap Russia’s oil prices for the past few months. Western countries have already imposed sanctions on several Russian energy products. However, the BBC reports that Russia is earning billions of dollars per month by selling oil to China and Asian countries.
In a virtual meeting, finance ministers said the plan to freeze Russian oil prices is specifically aimed at reducing Russia’s revenue and ability to wage aggressive wars. The ministers also said they want to minimize the impact of the conflict on low and middle income countries.
Fixing the price of Russian oil means that countries that adhere to this policy can import oil and petroleum products from Russia by sea only at that fixed price or less. Global oil prices rose after Russia’s military attack on Ukraine and remain high. As a result, the country’s exports have decreased, but its income from fossil fuels has increased.