G7 leaders agree to study Russian energy price caps

GARMISCH-PARTENKIRCHEN (Reuters): G7 leaders have agreed to study placing price caps on imports of Russian oil and gas to try to limit Moscow’s ability to fund its invasion of Ukraine, G7 officials said on Tuesday.

The European Union will explore with international partners ways to curb energy prices, including the feasibility of introducing temporary import price caps, a section of the final G7 communique seen by Reuters said. The officials said this meant both oil and gas.

The Group of Seven rich nations have been debating a global price cap for Russian energy to prevent Moscow profiting from its invasion of Ukraine, which has sharply raised oil and gas prices.

Russian oil export revenues climbed in May even though sanctions reduced its export volumes, the International Energy Agency said in its June monthly report.

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

The idea is to tie financial services, insurance, and the shipping of oil cargoes to a cap on Russian oil prices. So if a shipper or importer wanted these services, they would have to commit to the Russian oil being sold for a set maximum price.

Italy, whose economy is reliant on Russian energy, pushed to extend the price cap to gas.

Italian Prime Minister Mario Draghi last week warned of the need to tackle energy prices to contain inflation and said the main objection to a gas cap from fellow Europeans was fear it could lead Russia to reduce supplies further.

France has said the price cap mechanism should extend beyond Russian products to reduce prices more broadly, including for the G7 nations that are looking to source energy from elsewhere.