G7 countries agree to set a price cap on Russian oil as Moscow vows to cut off countries that join in
- The G7 countries agreed on setting a price cap on Russian oil, according to an announcement on Friday.
- The price cap is designed to "reduce Russian revenues and Russia's ability to fund its war of aggression," the announcement said.
The G7 — which includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States — will set a price cap on Russian oil, the group's finance minister announced Friday.
The G7 leaders have yet to announce exactly what the price cap will be.
"The price cap is specifically designed to reduce Russian revenues and Russia's ability to fund its war of aggression whilst limiting the impact of Russia's war on global energy prices, particularly for low and middle-income countries, by only permitting service providers to continue to do business related to Russian seaborne oil and petroleum products sold at or below the price cap," the G7 announcement said.
Russia said it would cut off any country that joined the plan.
"As far as price restrictions are concerned, if they impose restrictions on prices, we will simply not supply oil and petroleum products to such companies or states that impose restrictions as we will not work non-competitively," Deputy Prime Minister Alexander Novak said on Thursday, according to the Russian News Agency TASS.
A price cap would not allow refiners, traders, and financers to handle Russian crude oil unless it was traded below the set price.
"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," White House spokesperson Karine Jean-Pierre said Wednesday.
Analysts have warned that although it would slash Moscow's revenues, the price cap could also send crude oil prices soaring, Insider's Harry Robertson reported. JPMorgan said oil could hit $380 a barrel in a worst-case scenario, although it said a jump to $180 is more likely.