The UK urged its Group of Seven allies to agree a cut to the price cap on Russian oil, saying the move is necessary to put further pressure on President Vladimir Putin to end Russia’s war in Ukraine.
“Pressure on Russia’s war machine is needed now more than ever,” the UK’s Treasury said in a statement on Wednesday, after Chancellor of the Exchequer Rachel Reeves chaired a session on Ukraine at the G7 finance ministers’ meeting in Banff, Canada. “Putin has failed to engage in good faith with proposals from Zelenskiy to meet directly and attempts to broker a ceasefire from his illegal and brutal war.”
The G7 countries, which comprise the UK, US, Germany, France, Italy, Canada, and Japan, have been exploring ways to toughen the price cap to better degrade Moscow’s ability to fund its war in Ukraine. Under the current terms of the price cap, which is set at $60, western operators can insure and transport oil from Russia only when it’s purchased below the price threshold.
At the G7 meeting on Wednesday, Reeves stated “an ambition to move quickly in lowering the $60 price cap on Russian crude oil at this opportune time,” according to the UK statement. She also “called on G7 allies to be united in their work to ensure a just and lasting peace is secured,” the statement said.
Russia has responded to the price cap and a wider US and EU embargo on most Russian oil imports by using a covert fleet of tankers, often operating with unknown insurers or owners, which move its crude to new markets, especially in Asia. This shadow fleet has helped Russia work around the restrictions.
It remains to be seen whether the G7 will agree to a reduced oil price cap at the Banff meeting. France’s finance chief Eric Lombard told Bloomberg that the proposal is one of the issues on the table, but he declined to comment further as the package is still being discussed.
The price cap was initially designed to limit the amount of money Russia makes from its oil sales while keeping global oil prices from skyrocketing. With prices for oil slipping amid forecasts of a global surplus in 2025, Ukraine’s allies are open to taking more aggressive action, Bloomberg previously reported.
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