G-7 Plan Aims to Hit Russia Where It Hurts

Alliance plans to cap price of Russian oil
By Newser Editors and Wire Services
Posted Sep 2, 2022 10:48 AM CDT
G-7 Plan Aims to Hit Russia Where It Hurts
The Minerva Symphony tanker is seen at the Black Sea near Novorossiysk, Russia, in this file photo.   (AP Photo, File)

Finance ministers from the Group of Seven industrial powers on Friday pledged to put in place a system to cap Russia's income from oil sales. The aim is to reduce Russia’s revenues and, by doing so, its ability to fund its war in Ukraine, while also limiting the impact of the war on global energy prices, whose rise has fueled inflation around the world, per the AP. The G-7 statement, however, did not give any figure for a potential price cap and did not specify when the G-7 aims to finalize the plan. "We invite all countries to provide input on the price cap's design," it said.

When they met in June in Germany, the leaders of the G-7—the United States, Germany, France, Britain, Italy, Canada, and Japan—agreed to explore the feasibility of measures to bar imports of Russian oil above a certain price. To be effective, it would have to involve as many importing countries as possible, in particular India, where refiners have been snapping up cheap Russian oil shunned by Western traders. The Wall Street Journal notes that the G-7 plan aims to resolve a "dilemma" since the start of the Ukraine war: how to punish Russia without wreaking havoc on world markets.

The US has already blocked Russian oil imports, which were small in any case. The European Union has decided to impose a ban on the 90% of Russian oil that comes by sea, but the ban does not take effect until the end of the year. US Treasury Secretary Janet Yellen said that the G-7 had taken "a critical step forward" and that "today’s action will help deliver a major blow for Russian finances and will both hinder Russia’s ability to fight its unprovoked war in Ukraine and hasten the deterioration of the Russian economy."

(Read more Russia stories.)

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