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| Photo Credit: AP. |
The White House and G-7 nations have announced their plans to impose a price cap on Russian oil to cut funding for the Kremlin war in Ukraine. Finance ministers from the major industrialized nations announced the measure Friday that would be implemented through a prohibition on services that allow shipping of Russian oil purchased above the price cap, the Washington Examiner reports.
Leaders
indicated they plan to have the prohibition in place by December 5, when a
European Union ban on seaborne imports of Russian crude takes effect, to ensure
maximum impact, according to the Washington Examiner.
Although
ministers did not announce a price for the planned cap, they said initial cap
would be based on a range of technical inputs, adding the price level would be
revisited as necessary, according to Washington Examiner.
On Friday
morning Senior Treasury Department officials said the price will be set “above
the price of production” – high enough to encourage Russia to continue to
produce, while at the same time putting downward pressure on Moscow’s high
crude oil earnings, according to Washington Examiner.
"By
committing to finalize and implement a price cap, the G-7 will significantly
reduce Russia’s main source of funding for its illegal war, while maintaining
supplies to global energy markets by keeping Russian oil flowing at lower
prices," Treasury Secretary Janet Yellen said in a statement, according to
Washington Examiner.
Russia in
response said it would not sell oil to countries that participate in the price
cap.
"Companies that impose a price cap will not be among the recipients of Russian oil," Kremlin spokesman Dmitry Peskov told reporters, describing the price cap as an “absurd decision” that would “lead to a significant destabilization of oil markets,” Washington Examiner reported.
However
State Department sanctions coordinator James O’Brien dismissed Moscow’s concern
on “destabilization of the oil markets”, saying, Russia “needs to keep its
energy machinery running and needs the money,” the Washington Examiner quoted
him as telling reporters in Brussels. “What it chooses to do is its
decision."