The Group of Seven(G7) coalition announces that it will continue to cap Russian maritime oil prices at $60 a barrel, despite rising global crude prices and calls for a lower cap to limit Moscow’s revenues.
G7 leaders agree to maintain energy market stability
This decision was made after a review of the $60 cap that was set in December of last year in an effort to reduce Moscow’s ability to finance its war in Ukraine.
The G7 and Australia decide to maintain the cap in recent weeks, despite four weeks of gains in benchmark oil prices, helped by an OPEC+ announced production cut. The market was consolidating on Monday, with Brent and U.S. crude futures holding above $80 a barrel. Russian oil was selling at a discount of about $30 to Brent.
Coalition officials concluded that the price cap worked both to limit Russian revenues and to maintain energy market stability. However, they plan to continue to coordinate to ensure effective monitoring and enforcement, as well as intensify efforts to combat price cap fraud and sanctions against Russia.
This includes providing guidance to help service providers identify indicators of fraud, such as manipulating vessel tracking or not disclosing shipping, freight, customs and insurance costs separately from the oil itself. The U.S. Treasury Department also issued a warning to U.S. companies about potential price cap fraud on oil exported through the Eastern Siberia Pacific Ocean (ESPO) pipeline and ports in eastern Russia.
Efforts are being made to combat price cap fraud and sanctions on Russia
The oil price cap prohibits G7 and EU companies from providing transportation, insurance and financing services for Russian oil and oil products if they are sold above the cap. The United States and the United Kingdom have also imposed restrictions on Russian oil imports. The official noted that a recent report by the International Energy Agency (IEA) concluded that the G7 sanctions regime has been effective “in not restricting global crude and product supply, while simultaneously limiting Russia’s ability to generate export revenues.”
Russian crude exports have been steady at over 3 million barrels per day, and world markets have been stable. The G7 official said the coalition would continue to monitor the situation and take the necessary steps to maintain energy market stability while limiting Russian revenues.
The G7 coalition has maintained the $60/barrel price cap on Russian seaborne oil, while stepping up efforts to combat price cap fraud and sanctions on Russia. Coalition officials believe the price cap works to limit Russian revenues and maintain stability in the energy market, but will continue to monitor the situation and take necessary actions to maintain stability.
