The Kremlin warns and considers it "destabilizing" to the stability of the market

The Group of Seven will “urgently” impose a ceiling on the price of Russian oil

A view of fuel tanks for the Russian multinational energy company Lukoil at its headquarters in Brussels.

EPA

The Group of Seven announced that it would “urgently” impose a ceiling on Russian oil prices, calling on a “broad coalition” of countries to join this measure, with the aim of depriving Moscow of part of its resources from the energy sector, in an announcement issued yesterday, while the Kremlin warned that imposing The ceiling will "destabilize" the oil market.

And the finance ministers of the seven countries wrote in the declaration, that “the price ceiling will be set at a level based on a series of technical data, and the alliance will decide in its entirety, before putting it into practice,” stressing that prices in the future “will be publicly determined in a clear and transparent manner.”

The decision, which should be implemented "urgently", according to the announcement, was reached during an online summit of the finance ministers of the seven major industrialized countries (the United States, Germany, France, the United Kingdom, Italy, Canada and Japan).

German Finance Minister Christian Lindner told reporters at the end of the meeting that "Russia is benefiting economically from the uncertainty in energy markets linked to the war."

He stressed that "Russia is currently making great profits, thanks to the export of raw materials such as oil, and we want to address this firmly."

The Group of Seven declared in the declaration that “setting a price ceiling is designed specifically to reduce Russia’s revenues and its ability to finance its aggressive war, while reducing the impact of the Russian war on the world,” especially on “low-income countries.”

Practically, Russia will be able to sell its oil to these countries at a lower price than it currently relies on, but it remains higher than the production price, until it finds an economic benefit in continuing to sell it to these countries, and thus not cut off its supplies.

The challenge is to include as many countries as possible in this measure, because imposing a ceiling on oil prices will not be feasible, unless the major importing countries participate in it, according to experts who also point to the role of China and India in the issue.

In order to achieve this, the Group of Seven calls on “all countries to express their opinion on the concept of setting a price ceiling, and to implement this important measure,” in an effort to gather a “wide coalition” that increases the effects of the decision.

At the end of last June, the leaders of the Group of Seven countries, prompted by Washington, began discussing the issue of developing complex mechanisms to impose a ceiling on Russian oil prices, in a measure based on preventing insurance and reinsurance companies from covering the shipping of Russian oil.

On the other hand, Kremlin spokesman Dmitry Peskov told reporters, "We can state with confidence one thing, which is that taking such a decision will lead to a significant destabilization of the oil markets."

And the Russian Deputy Prime Minister-designate for energy issues, Alexander Novak, warned yesterday that Russia will stop selling oil to countries that will implement this measure.

"With regard to price restrictions, we will simply stop delivering oil or oil products to companies or countries that impose such restrictions," he said, according to Russian news agencies.

He considered that imposing a ceiling would be "completely absurd" and would destabilize the market, and "European and American consumers will be the first to pay for it."

Former Russian President Dmitry Medvedev also said that Moscow would stop gas supplies to Europe, if Brussels went ahead with setting a ceiling for the price of Russian gas.

The price ceiling will be set at a level based on a series of technical data, and will be decided by the alliance as a whole.

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