G7 Coalition Has Agreed To Set Fixed Price For Russian Oil: Report

Highlights
The Group of Seven rich nations and Australia have agreed to set a fixed price when they finalize a price cap on Russian oil later this month, rather than adopting a floating rate, sources said on Thursday. U.S. officials and G7 countries have been in intense negotiations in recent weeks over the unprecedented plan to put a price cap on sea-borne oil shipments, which is scheduled to take effect on Dec. 5 - to ensure EU and U.S. sanctions aimed at limiting Moscow's ability to fund its invasion of Ukraine do not throttle the global oil market.
“The Coalition has agreed the price cap will be a fixed price that will be reviewed regularly rather than a discount to an index," said a coalition source, who was not authorized to speak publicly. "This will increase market stability and simplify compliance to minimize the burden on market participants.”
The initial price itself has not been set, but should be in coming weeks, multiple sources said. Coalition partners agreed to regularly review the fixed price and revise it as needed, the source said, without disclosing further details.
Pegging the price as a discount to some index would have resulted in too much volatility and potential price swings, the source added.
The coalition worried that a floating price pegged below the Brent international benchmark might enable Russian President Vladimir Putin to game the mechanism by reducing supply, a second source with knowledge of the discussions said.
Putin could benefit from a floating price system because the price for his country's oil would also rise if Brent spiked due to a cut in oil from Russia, one of the world's largest petroleum producers. The downside of the agreed fixed price system is that it will require more meetings of the coalition and bureaucracy to review it regularly, the source said.
U.S. Treasury Secretary Janet Yellen and other G7 officials argue the price cap, set to begin Dec. 5 on crude and Feb. 5 on oil products, will squeeze funding to Russia without cutting supply to consumers. Russia has said it will refuse to ship oil to countries that set price caps.
Shipping services are eager to see more details about the G7 plan which is due to take effect in a month.
A steady price cap could enable insurers to more confidently roll over contracts and initiate new ones without fear that the price could be adjusted by the countries buying Russian oil, which could have potentially exposed insurers to sanctions.
No immediate comment was available from Treasury or the embassies of coalition members, which include the G7 rich nations, the European Union and Australia.
Separately, The Wall Street Journal reported on Friday that the United States and its allies had agreed on further details on which sales of Russian oil will face the price cap.
Each load of seaborne Russian oil will only be subject to the price cap when first sold to a buyer on land, the countries determined. Reuters could not immediately verify the report which cited people familiar with the matter.
Great Deals on Used Cars
View All Used Cars









Upcoming Cars










Upcoming Bikes










Explore More
Latest News
Related Articles

-16224 second ago
The selection committee comprising members of the FIM, IRTA and Dorna Sports announced the decision to drop CryptoDATA RNF over repeated infractions and breaches.

-14565 second ago
Subcompact SUV to get refreshed looks and new tech.

-13910 second ago
The news of Rossi's foray into the WEC arrives amid the release of the series' provisional 2024 entry list, featuring 19 cars in the Hypercar class and 18 in LMGT3

-13254 second ago
The 2024 KTM 1390 Super Duke R and top-spec Evo variant packs a larger capacity engine, more electronic aids and a radical new face as part of the upgrades

-5212 second ago
The new system aims to counterbalance Ducati's strategic advantage and address concerns from manufacturers about competitive disparities.

-2978 second ago
It has flashing front lights, a safety car roof bar, a front splitter, Recaro seats, a six-point racing harness, and a fire extinguisher.

-2258 second ago
Tata Motors launches its fourth Registered Vehicle Scrapping Facility in Chandigarh, named Re.Wi.Re, with the capacity to dismantle 12,000 vehicles per year

-228 second ago
New virtual race car will join the growing list of cars featured in the latest Gran Turismo video game

33 minutes ago
The upcoming Ferrari hypercar will replace the LaFerrari and could get a hybrid engine in place of the V12 as the brand moves towards an electrified era

11 months ago
A bigger-than-expected build in U.S. gasoline inventories and widening COVID-19 controls in China also added downward pressure on crude prices.

11 months ago
Ukraine's President Volodymyr Zelenskiy on Friday called on Europeans to remain united against Russia's war and to severely limit the price for Russian oil.
11 months ago
U.S. West Texas Intermediate (WTI) crude futures were down $1.66, or 2.1%, at $76.28 a barrel. There was no WTI settlement on Thursday due to the U.S. Thanksgiving holiday and trading volumes remained low.
11 months ago
U.S. West Texas Intermediate (WTI) crude futures were down $1.66, or 2.1%, at $76.28 a barrel. There was no WTI settlement on Thursday due to the U.S. Thanksgiving holiday and trading volumes remained low.
