Reuters learned about the plans of the G7 to impose a ceiling on oil prices from Russia by December

The mechanism for limiting the price of Russian oil in the G7 is planned to be introduced simultaneously with a partial EU embargo, Reuters learned. The embargo will take effect on December 5

“G7” plans to impose a ceiling on Russian oil prices by December 5, when EU sanctions will come into force prohibiting the import of Russian raw materials by sea, a source told Reuters.

“The goal is to meet the deadline set by the EU. We want to make sure that the price cap [on Russian oil and the partial EU oil embargo] comes into effect at the same time,” — said a senior G7 official.

According to him, a number of Asian countries are interested in introducing a G7 price cap, as this will allow them to improve their position in negotiations with Russia on new contracts.

In the “seven” want to set a price ceiling so that the price of oil is slightly above cost, but well below current market prices.

In early June, the EU imposed a partial embargo on Russian oil. Maritime deliveries of Russian raw materials to the EU should stop from December 5th. In addition, insurance and reinsurance of maritime transportation of Russian oil and oil products to third countries will be prohibited.

At the end of the same month, the G7 countries (Great Britain, Germany, Italy, Canada, France, the USA and Japan) held a summit in the Bavarian Alps, agreeing at it, in addition to the EU embargo, to limit the price of Russian oil. According to Japanese Prime Minister Fumio Kishida, the upper threshold is planned to be set at about half the current price.

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As Bloomberg reported, the ceiling can be implemented through the mechanisms of insurance and transportation, that is, it will be possible to insure and transport that oil, the price of which does not exceed the established threshold. In this regard, the US Treasury also expressed the hope that the price cap mechanism will work simultaneously with the partial embargo. “Our goal is that by December, when the insurance ban comes into effect, we can add a price ceiling to that,” US Deputy Secretary of the Treasury Adewale Adeyemo said.

The Russian authorities, in turn, warned that oil prices would rise significantly if the ceiling was introduced. According to President Vladimir Putin, Western countries are stepping on “the same rake” as with Russian gas. “The result will be the same” rise in prices. Oil prices will skyrocket,— he declared. And Deputy Prime Minister Alexander Novak noted that Russia will stop supplies if the ceiling on the cost of Russian oil is less than the cost of its production.

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