The leader of the Group of Seven (G7) agreed on Tuesday to develop a price cap mechanism for Russian oil that aims to cut the way for the Kremlin’s war funding on Ukraine.
US officials said the US and its allies have understood that Putin has been making more money, not less, through crude oil since the war broke out, and sanctions have not been fully effective in curbing Russia’s oil exports.
The decision also comes in the wake of the Biden administration’s rating downgrade due to rising energy prices and inflation. “The goal here is to starve Russia, starve Putin, its main source of cash, and drive down the price of Russian oil to help offset the impact of Putin’s war on the pump,” one official told CNN.
This announcement will shake the market and Russia can still sell its oil through back channels but it will not be able to make huge profits.
The plan behind the oil price cap mechanism is consumer or buyer nations will set lower prices for Russian oil and accept Moscow as they need the revenue.
There is a fear of retaliation from Russia as it could retaliate by further cutting energy supplies to Europe.
National Security Advisor Jake Sullivan also said that resolving the ‘extremely complex logistical and technical aspects’ is also a difficult objective.
The question of unity among the consumer countries also remains. According to European Council President Charles Michel, if implemented, the existing sanctions against Moscow would be changed.
G7 leaders have tasked ministers with an “immediate focus on development, consultation with third countries and the private sector in an effort to develop a price cap around oil”, an official told AFP news agency.
An official announcement is expected later in the final release as the three-day G7 summit in the Bavarian Alps is slowly coming to an end.
It was also reported that the United States pushed for an oil price cap at a meeting of the club of rich countries – which includes Britain, Canada, France, Germany, Italy and Japan.
West imposes several sanctions on Russia in response to Putin’s aggression Ukraine But targeting its oil industry is a big step because it signals an attack on Russia’s core industry.
(with input
read all breaking news , today’s fresh news watch top videos And live TV Here.