G-7 looks to recruit more countries on Russian oil cap before negotiating details, officials say

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Two months after they agreed to explore price limits on Russian oil sales, G-7 countries are still trying to recruit more countries to join their efforts before they enter more detailed discussions about the policy’s specifics, according to U.S. and European officials.

“The coalition has to be broader, and this is the diplomatic phase [negotiators] are entering into,” said one European official, requesting anonymity to discuss sensitive deliberations.

The world’s major democracies have banned the import of Russian oil. They are now negotiating a ban on insuring and shipping Russian oil to other countries, unless the sale is below a set price.

Russian President Vladimir Putin chairs a meeting of the State Council Presidium on the development of the national tourism industry in Vladivostok, Russia September 6, 2022.
Valeriy Sharifulin | Tass Host Photo Agency | via Reuters

They aim to restrict the amount of revenue the Kremlin receives, but keep Russian oil on the market to avoid supply disruptions.

Key importers of Russian oil – China, India, and Turkey – have not yet said whether they will join in the coordinated price cap or negotiate their own side deals with Russia. Their participation could determine how much leverage Western nations have to set prices.

“It’s premature to start discussing the price before the coalition comes together,” a senior Treasury official told CNBC.

Foreign leaders and financial officials will have several gatherings over the next two months – at the UN General Assembly in New York, meetings of the International Monetary Fund and World Bank in Washington, and multilateral summits overseas – to discuss the mechanism. Negotiators expect that the Group of 20 nations – or, 19 with Russia excluded – will have made a decision by the time they gather in Bali, Indonesia in mid-November.

“It will be the expectation that the G-20 countries will have been able, by that time, to communicate their possible participation,” the European official said. Until then, no discussions of the specific price under which to allow sale of Russian crude oil, high-value refined products and low-value refined products have taken place among allies.

“We have notions of what figures can be, but it’s just figures without a strong technical ground,” the European official said.

In recent days, G-7 negotiators formalized their intention to pursue the price cap, after announcing it at the conclusion of the recent Alpine summit. Treasury Secretary Janet Yellen suggested that the U.S. doesn’t necessarily need China or Russia to participate for the policy to have its intended effect.

“We’re already seeing this initiative pay off because countries that are buying Russian oil at greatly discounted prices,” Yellen said on MSNBC after meeting with G-7 negotiators on Sept. 2. “We’re having an impact.”

A senior White House official said the Biden administration expects the price cap to go into effect by the end of the year.

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