The G7 group of the most industrialized nations agreed on Friday to finalize and implement a price cap on Russian oil, aiming to reduce Vladimir Putin's oil revenues for his war chest.
The G7 finance ministers confirmed they would finalize and implement "a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally - the provision of such services would only be allowed if the oil and petroleum products are purchased at or below a price ('the price cap') determined by the broad coalition of countries adhering to and implementing the price cap."
The G7 invited all countries to provide input on the design of the price cap, looking to have "a broad coalition in order to maximise effectiveness and urge all countries that still seek to import Russian oil and petroleum products to commit to doing so only at prices at or below the price cap."
China and India, the largest buyers of Russian oil since the West started shunning Moscow's crude after the invasion of Ukraine, would be crucial to a successful implementation of a price cap, but it's unclear whether one or both countries would join G7's initiative.
"By committing to finalize and implement a price cap, the G7 will significantly reduce Russia's main source of funding for its illegal war, while maintaining supplies to global energy markets by keeping Russian oil flowing at lower prices," U.S. Secretary of the Treasury Janet Yellen said.
"I look forward to working with our G7 allies - as well as new coalition partners - as we move quickly to finalize the implementation of the price cap in the weeks to come," she added.
Meanwhile, Russia said it would not be selling its oil to countries that choose to adhere to the price cap.
"Companies that impose a price cap will not be among the recipients of Russian oil," Kremlin spokesman Dmitry Peskov was quoted as saying on Friday, reiterating a similar comment from Russian Deputy Prime Minister Alexander Novak from Thursday.
Russia also warned Europe on Friday it could halt natural gas flows if the EU decides to impose a price cap on Russian pipeline gas, as suggested by European Commission President Ursula von der Leyen.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More