G7 Finance Ministers Talk About a Russian Oil Price Ceiling to Combat Moscow’s Revenue

On Aug 31st, the White House said that G7 finance ministers would discuss the price cap on Russian oil proposed by the Biden administration at a meeting held on Sep 2nd. The White House spokesperson Karine Jean-Pierre said at a briefing that a price cap on Russian oil was the most effective way to hit Moscow’s revenue and would trigger a decline in not only Kremlin’s oil revenue but also global energy prices.

 The International Energy Agency (IEA) pointed out in July that although Moscow’s oil exports plunged to the lowest levels since last August, Russia’s export revenue in June increased by $700 million compared with that in May in light of current oil prices 40% higher than the average in 2021. Some western leaders have proposed an oil price cap to limit the purchase prices of refiners and traders for Russian crude, but the Kremlin said it could circumvent western sanctions by selling oil to states failing to comply with the price ceiling.

 On Aug 31st, U.S. Treasury Secretary Janet Yellen met with her new British counterpart Nadhim Zahawi and discussed the price ceiling plan and how to sustain Kyiv’s economy. Yellen said Russia’s invasion has contributed to a global energy prices spike. She believed a price cap is one of the most effective instruments in response to inflation. Not only is it able to ensure that the oil stably entered international markets at lower prices, but it is also capable of reducing Moscow’s revenue used to sustain military operations in Ukraine.

 Zahawi said he was confident that western partners would impose an effective cap to cut Russia’s oil revenue and maintain stable oil prices. He emphasized the success of the cap plan depended on the establishment of the broadest possible coalition to engage more countries in its implementation.