Monitoring Desk
WASHINGTON: The Group of Seven (G7) nations, Australia and the European Union on Friday agreed on a $60 per barrel price cap on Russian crude oil after they overcame resistance from Poland, which had pressed for the price cap to be as low as possible to deny revenues to Russia to limit its ability to finance its war in Ukraine.
The agreement has, for the movement, prevented a spike in global prices as the price cap aims to reduce Russia’s income from selling crude oil.
The EU embargo on Russian crude oil will take effect on December 5 to starve Russian President Vladimir Putin of funding for his most condemned war in Ukraine.
Aim of oil price cap
The oil price cap, which was led by G7 wealthy nations and the US, aims to prevent a sudden disappearance of Russian oil in the global market, which could have led to a new spike in energy prices and further fuel global inflation.
In a statement, US Treasury Secretary Janet Yellen said that the price cap will help restrict Putin’s primary source of revenue for what he said was his illegal war in Ukraine, besides ensuring the stability of global energy supplies.
The agreement comes after last-minute hectic negotiations with Poland sought to set the cap as low as possible to deny Russia the means to sustain its war in Ukraine.
A joint statement of G-7 nations said in a press release on Friday that the coalition was “prepared to review and adjust the maximum price as appropriate,” keeping in view market developments and potential impacts on coalition members and low and middle-income countries.
