G7 decided to review price ceiling on Russian oil exports

• G7 has decided to evaluate the price ceiling on Russian oil exports.
• The price was set to a maximum of $60.
• There are two objectives to the price ceiling of oil.

According to the US Treasury, the Group of Seven (G7) authorities have decided to evaluate the price ceiling on Russian oil exports in March rather than January as initially anticipated to give the market time to adjust if additional caps on Russian oil products are imposed.

As part of Western sanctions against Moscow for its invasion of Ukraine, the G7 countries, the European Union, and Australia decided on December 5 to prohibit the use of maritime insurance, finance, and brokerage services from the West for Russian seaborne oil priced above $60 per barrel.

On February 5, the coalition intends to impose two caps on Russian oil products: one for goods that are priced above crude, like diesel or gas oil, and another for goods that are priced below crude, such as fuel oil.

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“The Deputies agreed that this approach will better calibrate the price cap policy for refined products, given the wide range of market prices at which these products trade,” Treasury said after US Deputy Treasury Secretary Wally Adeyemo met virtually with coalition officials on Friday.

Two months following the cap’s adoption, in February, the coalition initially intended to reconsider its amount.

According to Treasury officials, the oil price ceiling has two objectives: lowering Russia’s earnings by institutionalising steep discounts on its oil purchased by large users like China and India and ensuring a sufficient supply of oil on the world market.

“As long as the price cap continues to meet the Coalition’s dual goals, the Deputies agreed to undertake a review of the level of the crude price cap in March,” Treasury said.

The coalition’s assessment of market dynamics after the adoption of the refined products quotas and its briefing on an EU technical review of the crude price cap are both made possible by the March deadline, according to the coalition.

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