The West's biggest economies agreed on Friday to impose restrictions on Russian oil to curb Moscow's ability to finance the war in Ukraine without fueling global inflation.
The finance ministers of the "big seven" countries, including the US, Japan, Canada, Germany, France, Italy and the UK, said they would provide shipping services for Russian crude oil and petroleum products around the world. "Allow, forbid." above the price limit. This may interfere with the insurance or financing of oil transportation. The price cap will be set by the country's "broad coalition," they said in a joint statement. It comes into effect in early December, along with additional EU sanctions, including a ban on Russian maritime oil imports.
Russia retaliated by banning oil exports to countries that previously had price caps. "We will not supply oil and oil products to companies or countries that impose restrictions," Deputy Prime Minister Alexander Novak told reporters on Thursday. The Biden administration has been calling on the government to impose price caps for months. The West has imposed sanctions on many of Russia's energy exports, but Moscow still earns billions of dollars a month by diverting oil to countries such as China and India.
"The price cap is specifically designed to reduce imports and Russia's ability to finance wars of aggression, while limiting the impact of Russian warfare on global energy prices, particularly in low- and middle-income countries," the finance minister said . G7. However, this action will still require work and will be very complex to manage. The highest price for Russian oil has not yet been determined. To be effective, wider international support is needed. "What China and India do should be a national decision," a senior US Treasury official told reporters on Friday. But even if the cap forces Russia to stop cheaper transactions with its trading partners by setting a cap on the price of goods sold, the cap will still serve its purpose, the official added. Novak called the proposal to impose restrictions "absolutely absurd" and said it could destroy the world oil market. TASS reports. "These actions will only destabilize the oil industry and the oil market," he said. Russia can offer alternative insurance for oil transportation. However, US Treasury officials noted that it would be more costly to provide more incentives for buyers to participate in the price cap. According to the International Energy Agency, flows of crude oil and other petroleum products to the US, UK, European Union, Japan and South Korea have fallen by about 2.2 million barrels per day since the start of the war in Ukraine. But two-thirds of that decline was diverted to other markets, filling Moscow's coffers. The IEA reported that export imports in July amounted to about $19 billion. Russia's control of a significant portion of the world's energy supply remains a major issue six months after the invasion of Ukraine. This week, Russia temporarily halted natural gas supplies to the region through a critical pipeline and cut all supplies to French utilities, exacerbating the problem that has pushed European inflation to a record 9 percent. Shortly after Friday's G7 announcement, Russian state energy giant Gazprom said on Saturday it would not resume supplies through the Nord Stream 1 pipeline as planned. The company cited the oil spill and did not provide a timetable for when shipments would resume.
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The finance ministers of the US, UK, France, Germany and Italy said: "This initiative depends on an incentive system that will respect price caps by importers seeking insurance and transport services from companies in the G7 and EU countries to transport Russian oil". , Canada and Japan issued a statement after Friday's meeting. The size of the cap will be determined in future discussions with all participants, including the non-G7 countries that can participate in the plan. "The price cap is specifically designed to limit the impact of the Russian war on world energy prices, while reducing Russia's ability to finance a war of aggression and Russia's imports," G7 ministers said in a joint statement.
"The initial price cap will be set at a level based on various technical inputs and will be decided by the entire coalition prior to implementation in each jurisdiction," they added.
The deal is a political victory for the United States, which first proposed a price cap in April as punishment for Russia's war in Ukraine. But he had to overcome the skepticism of some EU countries about its feasibility.
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