Russian oil, how the ceiling on the price of the G7 works

THE G7 countriesan intergovernmental group made up of the world’s leading economies, have reached an agreement for limit the export price of Petroleum Russianin order to reduce the Kremlin’s ability to finance its own war in Ukraine and protect consumers from soaring energy costs. In response, Moscow has threatened to stop selling crude oil to all countries that will approve the restrictions.

“Today we confirm our common political will to implement adisruption of maritime transport services for crude oil and petroleum products of Russian origin globally“, G7 ministers, consisting of the United States, Canada, United Kingdom, France, Germany, Italy and Japan, said in a joint statement reported by Reuters. Under the agreement reached, shipments will only be allowed if Russian oil cargoes are purchased at a price level equal to or below that “determined by the broad coalition of countries that join and implement the price limit”.

The G7 plan to enforce the limit is that suspend marine finance and insurance for all cargo ships transporting Russian oil purchased at higher than established prices. What will this ceiling be has not yet been decidedbut will be determined on the basis of a “Series of technical inputs” which will have to be approved by the entire G7 coalition. The ok of the seven countries will therefore be required. But the finance ministers also requested the unanimous approval of all member states of the European Union, a permanent invitation to the G7.

Some critics have argued how this action might turn out ineffectivewithout the support of large oil importers such as China and India, which have significantly increased their purchases of Russian crude oil in recent months. At the same time, however, other analysts argue that both Asian powers have already expressed a strong interest in buying Russian oil at an even lower price, in line with the limit that will be imposed by the G7 countries.
G7 ministers then underlined that they wanted to activate the initiative in line with the start of the sixth EU sanctions package against Moscow, which will ban Russian oil imports into the bloc starting in December. Furthermore they also specified that the price limit will be carefully monitored and reviewed on the basis of its effectiveness.

Meanwhile, Russia has announced the block at a later date of the Nord Stream gas pipeline after the discovery of a leak.