G7 will announce cap for Russian crude soon, with regular changes

G7 will announce cap for Russian crude soon, with regular changes

¬©Reuters. Flags of the G7 countries during the first working session of the Group’s foreign ministers in Muenster, Germany November 3, 2022. REUTERS/Wolfgang Rattay/Pool

WASHINGTON (Reuters) – The G7 is expected to announce a price cap on Russian exports soon and will likely adjust the level a couple of times a year rather than monthly.

This was announced yesterday by a senior US Treasury official.

The G7, which includes the United States, the European Union and Australia, are expected to apply the cap on Russian oil exports by sea on December 5, as part of sanctions aimed at punishing Moscow for encroaching on Ukraine.

The goal of this unprecedented mechanism is to reduce Russia’s oil revenues that finance Moscow’s war, while maintaining oil flows to global markets and avoiding price spikes. The ceiling on exports of Russian petroleum products should take effect from February 5th.

The Treasury official told reporters the European Union was consulting with bloc member states on price caps. “Our hope is that the consultation will end relatively soon and put us in a position to announce a price from our entire coalition,” the official said.

A decision on the level of the price cap could come as early as today or tomorrow, after a meeting of EU ambassadors, according to a source familiar with the situation.

The G7 price cap would allow companies to provide services — including insurance, shipping and import financing for Russian oil to coalition members — as long as the purchase price of the crude is below the price cap.

(Translated by Enrico Sciacovelli, editing by Giancarlo Navach)

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