The G7 finance ministers agreed on a price cap for Russian oil during an online meeting on Friday.
The ministers said in a statement that they confirm their “joint political intention to finalize and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally."
According to the ministers, the goal is to support “stability in global energy markets” and to minimize “negative economic spillovers, especially on low-and middle-income countries”.
They added that “the provision of such services would only be allowed if the oil and petroleum products are purchased at or below a price (‘the price cap’) determined by the broad coalition of countries adhering to and implementing the price cap”.
The ministers also said that the G7 will develop "targeted mitigation mechanisms" to ensure that vulnerable countries will still have access to energy markets, including “from Russia.”
"In line with G7 Leaders’ commitments at Elmau, we continue to encourage oil producing countries to increase their production to decrease volatility in energy markets, and in this context welcome OPEC’s recent decisions to increase output amid tight supply conditions,” they pointed out.
Japanese Finance Minister Shunichi Suzuki has, meanwhile, stated that the decision to impose a price cap on Russian oil was made by his colleagues from the G7 сountries unanimously.
Referring to Russia’s ongoing special military operation in Ukraine, US Treasury Secretary Janet Yellen, for her part, argued that the price cap “will help deliver a major blow for Russian finances and will both hinder Russia’s ability to fight its unprovoked war in Ukraine and hasten the deterioration of the Russian economy”.
“This price cap is one of the most powerful tools we have to fight inflation and protect workers and businesses in the United States and globally from future price spikes caused by global disruptions”, she claimed.
UK Chancellor Nadhim Zahawi argued in turn that the G7 “will curtail [Russian President Vladimit] Putin’s capacity to fund his war from oil exports […]” by imposing the price cap. Zahawi added that the G7 will ban providing services, including insurance, to vessels carrying Russian oil above an agreed price cap.
Dmitry Birichevsky, head of the Russian Foreign Ministry's Department of Economic Cooperation, has meanwhile warned that the introduction of a price cap for Russian oil and gas is “risky and will only aggravate the energy crisis.”
He said that in the event of such steps by the West, “Russian companies would act on the basis of economic expediency.”
The remarks come after Kremlin spokesperson Dmitry Peskov told reporters earlier on Friday that the G7 imposing a price cap on Russian oil would be an “absurd decision” and would “lead to a significant destabilisation of oil markets”.
Peskov also said that Russian oil, which will not be delivered to Europe, will be supplied to those countries that respect market conditions via alternative routes.
The Kremlin spokesman referred to a recent remark by Russian Deputy Prime Minister Alexander Novak that Moscow will not deliver oil or oil products to countries that support the idea of putting a limit on the price of Russian oil.
"[Oil will be delivered] in alternative directions, to those countries that operate according to market conditions," Peskov said when asked where the oil will be redirected.