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The G7 idea to place a price cap on Russian oil should include a cap on the prices of gasoline and diesel, too, Fatih Birol, Executive Director of the International Energy Agency (IEA), told Reuters in an interview published on Tuesday.
“My hope is that the proposal, which is important to minimise the effect on the economies around the world, gets buy-in from several countries,” Birol told Reuters on the sidelines of an energy forum in Australia.
“And if it is pursued, it is not only focused on crude oil, as refined products are also an important challenge for the economies and will be more of a challenge in the next months to come,” the IEA’s chief added.
After their summit in Germany last month, the leaders of the G7 group of the world’s leading industrial nations invited all importing countries to consider a cap on the price of Russian oil.
“We will consider a range of approaches, including options for a possible comprehensive prohibition of all services, which enable transportation of Russian seaborne crude oil and petroleum products globally, unless the oil is purchased at or below a price to be agreed in consultation with international partners,” the G7 leaders said in their final communique.
“We invite all likeminded countries to consider joining us in our actions,” they added.
The countries are still considering the possibility of a price cap on Russia’s oil, but they face a difficult balancing act between trying to limit the Kremlin’s oil revenues, the most significant contribution to Vladimir Putin’s war chest, and not driving international crude prices higher still.
It’s not certain how this could be achieved without disrupting the market further, which could send oil prices even higher.
This week, U.S. Treasury Secretary Janet Yellen is heading to Asia to seek support for the U.S. idea of capping Russian export crude oil prices.
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.