Leaders of the world’s biggest developed economies are weighing a cap on the price of Russian oil meant to strike at the main pillar of the Kremlin’s finances following its invasion of Ukraine — and to limit the havoc that high energy prices are wreaking worldwide.
Details haven’t been agreed at the Group of Seven summit in Elmau, Germany, but the basic idea would be to tie the price cap to the services that make trading oil possible. For instance, insurers would be barred from dealing with shipments that are above the cap, wherever it winds up being set.
Because such service providers are largely based in the European Union and United Kingdom, Russia would be expected to face difficulty finding large-scale workarounds.
Limiting the price would reduce the Kremlin’s income from oil — at the start of the war, it was about $450 million per day from Europe alone. The cap also would limit the impact of higher oil prices on inflation in consuming countries, with the cost of gasoline and diesel squeezing consumers and businesses.
