A senior US official confirmed on Friday (4 November) that the G7 countries will have worked out all the practical details of the Russian maritime crude oil price cap by 5 December, when the measure is due to take effect.
In September, the G7 had agreed in principle to a price cap in response to Russia’s war in Ukraine, but in recent weeks ministers have still been working out the final details of implementation.
During his visit to Brussels, US Ambassador James O’Brien, who heads the US State Department’s sanctions coordination against Russia, told reporters that technical discussions were underway on price and cap controls.
“The pivot date is December 5Mr. O’Brien said, adding that he believes that “price caps have been discussed long enough for market participants to be aware of their arrival and voice their opinion on the best way to implement it“.
Sir. O’Brien declined to comment on specifics, saying the entire package would be ready on time and “will definitely be ready on December 5 and we will address these issues“, he said.
“It is very simple. This is just a safety marginsaid Mr O’Brien.
“So someone who runs an oil tanker knows that: he knows how much oil he has, he knows what coverage he wants“, he added.
The price cap, supported by the United States, Japan, Britain, Canada and the European Union, would ban shipping and insurance companies from servicing tankers carrying Russian crude unless the oil is sold at or below a specified price.
The maximum price, which has not yet been set by the G7, must be just above Russian production costs to limit Moscow’s revenue from oil sales and reduce its ability to finance its invasion of Ukraine.
However, insurance and shipping companies, which fear any violation of the future price cap in order not to be subject to secondary sanctions themselves, argue that they also need to know when the sale price will be recorded, how it will be checked and what will happen to the cargo in the event of objection.
Western officials also say the initiative’s success will depend on how many non-G7 countries choose to pledge or buy at or below the cap.
China and India are seen as two key players given their purchasing power and the fact that they have long bought oil from Russia.
In addition, Moscow has promised not to sell oil to countries that use the cap.
“India and China are major importers of Russian oil. Our goal is to see Russian oil reach the market. India and China are tough negotiators so I expect they won’t pay full priceO’Brien told reporters in Brussels after meetings with European Commission officials about sanctions.
“They are very interested in what [le plafonnement des prix] whether it should be allowed or not“, he added.
US Secretary of State Antony Blinken, speaking to reporters after a two-day G7 meeting in the western German city of Münster, said price caps would help limit gains in Russia from energy sales.
“Russia will make the decisions it wants, but I think it will be in the country’s interest to continue selling energysaid Mr Blinken.
“This is a good mechanism to ensure that energy remains on the market, but Russia’s gains from it are limited“, he added.
When asked if he could reassure consumers that the mechanism would not result in higher gas prices, he replied: “We’ll see how it goes“.