Leaders of the Group of 7 nations meeting in Germany, seeking a new way to throttle Russia’s finances while limiting the harm to Western economies, are discussing imposing a ceiling on the price paid for Russian oil.
Details of the plan are still being discussed, but the idea is to limit how much Russia can earn from the oil it sells while still keeping markets well supplied.
A price cap is being considered because, despite sanctions imposed by the West after Russia’s invasion of Ukraine, Moscow is still earning substantial revenue from oil as countries such as China and India buy Russian oil, which Moscow has been selling at a significant discount.
While Russian output has declined about 8 percent since the war began, prices have risen, generating a steady of supply of cash to support the government and helping it to fund its war effort. Crimping that revenue stream is a goal at the G7 conference.
But it remains unclear exactly how price caps would work, and which countries would go along with them. And analysts are skeptical that caps would lower the price of oil, which is more likely to be determined by global supply and demand.