G7 discussions with China, India on Russian oil price cap positive: Report

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

G7
G7 discussions with India, China positive on capping Russian oil
Reuters WASHINGTON
2 min read Last Updated : Jun 29 2022 | 7:44 AM IST

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The source said G7 governments were still determining which services for oil transport could be withdrawn for cargoes above the price cap and were considering direct bans of shipping services, insurance, trade finance, brokering of cargoes and other services.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.)

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

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

More From This Section

Topics :G7ChinaIndia

Gold price in Delhi today is ₹ 84,470, Click Here for other cities. Silver price in Delhi today is ₹ 84,470, Click Here for other cities.

First Published: Jun 29 2022 | 7:42 AM IST

Next Story