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Prices for oil and gas from Russia will be capped

The final communique of the G7 summit said that the European Union, together with international partners, will explore ways to contain energy prices, including the possibility of imposing temporary restrictions on import prices. Officials said the issue was both oil and gas.

The G7 countries are discussing capping world prices for Russian energy so that Moscow does not benefit from its invasion of Ukraine, which has driven oil and gas prices up sharply.

Russian oil export earnings rose in May despite sanctions curbing exports, according to the International Energy Agency’s June monthly report.

The mechanism for limiting energy prices from Russia

The United States was the first to call for a mechanism to limit the price other countries pay for Russian oil.

The idea is to tie financial services, insurance and shipping oil cargo to a ceiling on Russian oil prices. Thus, if a shipper or importer needs these services, he will have to commit to selling Russian oil at a set maximum price.

Italy, whose economy depends on Russian energy resources, insisted on setting a gas price ceiling. Italian Prime Minister Mario Draghi last week warned of the need to lower energy prices to curb inflation and said the main European objection to the gas ceiling stemmed from fears it could lead to further cuts in Russia’s supplies.

France said the price cap mechanism should extend beyond Russian goods to lower prices more broadly, including for G7 countries looking for energy sources from other sources.

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