Group of Seven democracies have had positive and productive discussions with China and India about a plan to cap the price of Russian oil, a source familiar with the G7 discussions said on Tuesday, adding the two major oil consumers would have incentives to comply.
The source, speaking on condition of anonymity, said the price-per-barrel cap level had not yet been determined, but it would have to be high enough to give Russia an incentive to keep producing oil.
Russian crude has been selling at heavy discounts of $30 to $40 per barrel compared to benchmark Brent crude prices of $110 to $120 per barrel due to Western sanctions on Moscow over its invasion of Ukraine.
G7 leaders on Tuesday agreed to explore imposing a ban on transporting Russian oil that has been sold above a certain price in an effort to reduce Moscow's revenues and deplete its war chest.
With the European Union preparing to impose a phased embargo on Russian oil later this year, U.S. Treasury Secretary Janet Yellen has advocated the cap as a way to cut Russia's oil revenues while keeping supplies on the market and avoiding another major price spike that could prompt a recession.
The source said G7 governments were still determining which services for oil transport could be withdrawn for cargoes above the price cap and were considering direct bans of shipping services, insurance, trade finance, brokering of cargoes and other services.
Western sanctions still allow many countries to buy Russian crude, and India and China have increased their purchases at steep discounts. The source said the two countries would be able to buy Russian crude at even lower prices under the plan, calling it an attractive pitch to Beijing and New Delhi.
If Russia were simply to refuse to sell its crude at the capped price, it would have few options to sell it at higher prices, given the limited number of ships that would be available for subverting the sanctions that are outside of London-based insurance and financing markets, the source said.
With limited storage capacity, Russia would then have to significantly shut down production, reducing its cash flow and causing further damage to its energy sector, the source added.
(Reporting by David Lawder; Editing by Gareth Jones)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
You’ve hit your limit of {{free_limit}} free articles this month.
Subscribe now for unlimited access.
Already subscribed? Log in
Subscribe to read the full story →
Quarterly Starter
₹900
3 Months
₹300/Month
Smart Essential
₹2,700
1 Year
₹225/Month
Super Saver
₹3,900
2 Years
₹162/Month
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Access to Exclusive Premium Stories Online
Over 30 premium stories daily, handpicked by our editors for subscribers


Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share


Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor


Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements


Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app