G7, Australia to cap Russian oil price at $60 per barrel

G7 (Germany, Italy, France, the UK, Canada, Japan, and the US) and Australia have agreed to introduce a price cap on Russian seaborne crude oil at $60 per barrel, the statement by the “Price Cap Coalition” was published on the US Treasury’s website.

“Next week, the Price Cap Coalition will ban a broad range of services—including maritime insurance and trade finance—related to the maritime transport of crude oil of Russian Federation origin (“Russian oil”) unless purchasers buy the oil at or below $60/barrel,” the statement reads.

The measure will come into force on 5 December or shortly after.

It is noted that on 5 February the ban will also be applied to maritime transports of Russian petroleum products bought at prices that are higher than the set price cap.

On 2 December, the European Council adopted the same decision. The price cap will be regularly reviewed starting on 15 January so that it always stays at least 5% lower than the average market price.

The imposition of a price cap on Russian oil exports was included in the 8th EU sanction package adopted to punish Moscow for its invasion of Ukraine. The Russian crude will be targeted on 5 December, while petroleum products will be sanctioned on 5 February 2023. However, Hungary managed to cancel the price cap on the oil supplied via pipelines. Moreover, the EU imposes export restrictions on several categories of goods.

The Kremlin earlier said that Russia would not trade oil with the countries that impose a price cap. “Russia will not act against common sense and pay for others’ prosperity. We will not supply energy resources to the country that will cap prices for them,” Russian President Vladimir Putin said.