G7 countries agree plan to impose price cap on Russian oil

European Union member states have agreed to cap the price of Russian oil as they seek to cut Kremlin revenues and punish Vladimir Putin for the Ukraine war.

Ambassadors from 27 countries on Wednesday signed off on the proposed cap on the price of crude shipped to countries outside the bloc as part of the European bloc’s eighth package of sanctions against Moscow, according to four people familiar with the decision.

The price cap has been under negotiation among the G7 partners for months.

Officials briefed on the talks told the Financial Times that exact details of the price cap were not included in the eight packages, pending adoption by the G7, and that a new deal would need to be implemented unanimously.

The officials added that the EU also agreed that it would consider the effectiveness, the international response, and the impact on their economies of the price cap in deciding how to enforce it.

The sanctions will go into effect officially after they are published in the Official Journal of the European Union and are expected later this week.

The UK chancellor, Nadhim Zahawi, said the decision followed a meeting earlier this week in Washington with the US Treasury secretary, Janet Yellen.

He said: “We will curtail Putin’s capacity to fund his war from oil exports by banning services, such as insurance and the provision of finance, to vessels carrying Russian oil above an agreed price cap.

“We are united against this barbaric aggression and will do all we can to support Ukraine as they fight for sovereignty, democracy and freedom.”

Yellen said the measure would be implemented “in the weeks to come” and represented a “major blow for Russian finances and will hinder Russia’s ability to fight its unprovoked war in Ukraine”.

She said the move would help fight inflation and protect businesses and consumers from “future price spikes caused by global disruptions”.

Russian President Vladimir Putin on Wednesday (October 5th) signed a law formally annexing 4 Ukrainian regions partially controlled by Russia, the TASS news agency reported.

On Friday, September 30, Putin signed documents to annex 4 regions of Ukraine to the Russian Federation, while the European Union pledged to strengthen sanctions against Moscow to counter measures he described as “illegal.”