June 28, on the day when the Group of Seven (G7) leaders’ summit was coming to an end, a source revealed to Reuters that in response to the key topic of the meeting, “limiting Russian oil prices,” the Group of Seven had already reached out to China , India held discussions and evaluated them as “positive and productive”.
Reuters report screenshot
reported that the leaders of the Group of Seven countries agreed on June 28 to explore "implementing an embargo on Russian oil sold above a certain amount" in an attempt to reduce Russia's income and allow Russia to exhaust its war funds. the goal of.
A source claimed that the G7 has had "active and productive" discussions with China and India on plans to "set a ceiling on Russian oil prices."
Previously, White House National Security Advisor Sullivan said that China's purchase of Russian oil to replenish its reserves would not violate U.S. sanctions against Russia.
The source also pointed out that the price ceiling level for a barrel of oil has not yet been determined, but it must be high enough to incentivize Russia to continue producing oil.
Sources said frankly that if Russia completely refuses to sell crude oil at the "ceiling price", there will be no chance of selling it at a high price. Because in the context of the EU "insurance ban" (which prohibits the provision of insurance for ships transporting Russian oil), the number of ships willing to "violate sanctions" to transport crude oil to Russia is limited.
"At present, due to limited storage capacity, Russia will have to significantly halt production and reduce the flow of cash in order to avoid further losses to its energy sector due to continued production." The source added that the G7 government is considering targeting Russia Which oil transportation services can be canceled for goods exceeding the price limit. In addition, they are also considering directly banning shipping, insurance, trade financing, cargo agency and other services to Russia.
Since the outbreak of the Russia-Ukraine conflict, Western countries led by the United States have imposed "oil sanctions" on Russia, but they still allow many countries to purchase Russian crude oil.
Russian crude is selling at a "significant discount" of $30 to $40 a barrel, while benchmark Brent crude prices are as high as $110 to $120 a barrel.
Therefore, Russian oil remains "attractive" in the international market. For example, India and China have increased their purchases of Russian oil at a significant discount. The United States itself is also quietly buying. Therefore, the West's efforts to stifle Russian oil exports have instead allowed Russia to obtain record revenues from them.
The European Union is preparing to impose a phased embargo on Russian oil later this year. The United States advocates imposing a price ceiling on Russian crude oil through a "price exception" mechanism (price expectations) to limit Russian energy revenue. The new mechanism of
will "exempt" a specific amount of Russian oil, impose restrictions on the excess, and prohibit related insurance and financial transactions services. Limiting Russian oil revenues while allowing more oil supplies to enter global markets. The new mechanism is also an important complement to the EU's "insurance ban" to avoid another major price spike that could trigger an economic recession.
Although the G7 is pushing for a ceiling on Russian oil prices, the consensus is further away than it seems. On June 27, the European version of Politico News Network (politico.eu) quoted two officials who observed the negotiation process as saying that French President Macron vetoed a proposal to limit Russian oil prices at the G7 summit and instead A "global price limit" was proposed. France wants all oil-producing countries, including the United States, to impose price controls. But in the end, Macron’s bold proposal was not passed at the G7.
In addition, it is not easy to implement the "Russian oil price ceiling". The Atlantic Council, a US think tank, issued a document on June 27 stating that support from the G7 is not necessary for the policy to take effect. If the "Russian oil price ceiling" is to be pushed forward, the Biden administration must first follow up without delay. At the same time, the U.S. Congress must also advance legislation to codify the procedures for setting and enforcing the ceiling. While support from Congress is not required, it helps provide clarity to energy market participants and demonstrates U.S. determination to uphold the policy as long as needed.
Original title: British media: The G7 wanted to limit the price of Russian oil, so it turned to China and India
Source: Observer.com
