- G7 finance ministers are due to meet on Friday to hammer out a US-led plan to cap Russian oil prices.
- Officials will approve details of the plan in a virtual meeting, The Wall Street Journal reported.
- Some analysts warn that Moscow could retaliate by shutting down oil production, which could send prices skyrocketing.
The United States and its G7 allies plan to meet on Friday to discuss capping the price of Russian oil, a move that could reduce revenue entering Moscow’s coffers but risks sending crude prices skyrocketing. .
The countries’ finance ministers are expected to endorse the U.S.-led price cap plan and approve details in a virtual meeting, The Wall Street Journal reported Thursday, citing people familiar with the matter.
In recent months, US officials have been pushing for G7 allies – Canada, France, Germany, Italy, Japan and the UK – to adopt the price cap, saying it would hurt Russian President Vladimir’s war machine. Putin and reduce global inflation.
“This is the most effective way, in our view, to hit Putin’s income hard and it will not only lower Putin’s oil income but also lower global energy prices,” the door-keeper said on Wednesday. word of the White House, Karine Jean-Pierre. .
However, some analysts have warned that the plan could prompt Russia to cut oil production in retaliation, which could push up crude prices.
The meeting of G7 finance ministers comes as Russian oil exports remain strong, thanks to a successful pivot to India and China.
Its oil exports averaged 7.75 million barrels a day in the first seven months of 2022, according to International Energy Agency data in August. That’s up from the 7.5 million average seen in 2021 as a whole.
The idea of the price cap plan is that G7 countries would not allow refiners, traders and financiers to handle Russian crude oil unless it is trading below a set price. The exact price level is expected to be discussed on Friday.
The UK has by far the largest marine insurance market in the world. This gives the G7 a certain weight in the world oil market, as does the economic power of the United States and the European Union.
However, analysts have questioned whether China and India will stick to any US-led plan, given their willingness to continue buying Russian oil even after Ukraine invaded in late February.
Some on Wall Street have warned that crude prices could jump, if the cap doesn’t unfold as expected. JPMorgan said oil could even reach $380 a barrel in the worst-case scenario, although it said a jump to $180 was more likely.
Brent crude, the international benchmark, traded Thursday down 2% at $93.60 a barrel.
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