The American newspaper The Wall Street Journal hoped that the finance ministers of the G7, which includes rich democracies, would approve the plan to set a ceiling on Russian oil prices and commit themselves to its implementation.

And the paper believed the pending move would “open a new front in the West’s hitherto largely unsuccessful efforts to cut Russia’s oil revenues as there is no sign of the war in Ukraine easing.”

She pointed out that the group’s representatives are still trying to answer many difficult questions about how to determine the maximum price at which the ceiling will be set, especially since oil and gas are still an important source for Russia and account for about half of the country’s income.

Western officials have been working for months to curtail financial flows while keeping enough Russian oil on world markets to prevent a new surge in already high energy prices.

The newspaper explained that the plan, which officials discussed over the summer, includes “banning the countries of the group from financing and supplying Russian oil unless the oil is sold at a price below the specified price.”

According to the International Monetary Fund, these countries make up more than 30% of the global economy and are responsible for the security of more than 90% of the world’s freight traffic, according to the Brueghel think tank.

“Our goal here is to create a permitting structure that will allow Russian oil to flow, but will reduce its revenues,” the newspaper quoted U.S. Deputy Treasury Secretary Vali Ademo as saying in an interview.

She added that officials are trying to strike a balance between cutting Russian revenues and maintaining an incentive for Russia to sell its oil, provided the plan applies to other oil products such as fuel oil, one of Russia’s main exports, as well.

The newspaper quoted analysts as saying oil traded in New York on Wednesday at about $90 a barrel, while Russian oil is already trading at a discount of more than $20 a barrel.

In the spring, US Treasury Secretary Janet Yellen began pushing for a price cap amid fears that an EU plan approved in June to ban imports and secure most of Russia’s oil would cause prices to rise faster.

Yellen warned that the union’s plan could exacerbate inflation and push the global economy into recession, while ensuring the Kremlin can make up for lower sales with higher prices.

The newspaper pointed out that European officials are skeptical about the plan’s ability to influence prices, and senior US Treasury officials believe that markets are underestimating the impact that the EU embargo could have on world oil prices, as domestic estimates show that the price of crude oil could rise. to about $140 per barrel.

EU sanctions on insurance and financial services for Russian oil will come into force on 5 December.

Under the price cap scheme, the EU ban on insurance will be lifted, allowing Western companies to continue providing financial services to ship and sell Russian oil outside the US and Europe at a set price.

Despite this, important divisions remain among G7 members over the proposal, with officials disagreeing on how many non-G7 countries should join the price cap for it to be viable.

Given that the G7 countries themselves are seeking to completely ban Russian oil imports, the plan depends on the willingness of other global buyers in Africa, Asia and elsewhere to stick to the price cap proposal, and then those countries or companies. what to exploit will have to be negotiated. The maximum price for the admission of Russian oil on imported ships is provided by the West.

She added: “However, support from outside the G7 remains uncertain as officials and analysts see the ability to persuade China to stick to the plan is very limited, and it also seems unlikely that India, whose Russian oil purchases rose from zero before the war to one million barrels per day, agree with the plan.

The newspaper reported that prior to the European Union’s insurance ban, India had already begun using alternative ways to buy Russian oil not covered by Western funding or insurance.

European officials urged the G7 to enlist the support of other Russian oil buyers, including Turkey, Egypt and South Africa, before proceeding with the plan, but US officials emphasized that the solidarity of these countries was initially “less important” as the price ceiling was anyway will encourage buyers. Others are pushing for additional discounts from Moscow, and setting a price ceiling could also lead to higher costs for Russia, and then it will develop other methods of delivery, the newspaper writes.

And some US allies, as well as oil financiers and traders, are wondering if Russia will continue to sell oil below that ceiling, especially as it cut natural gas supplies to Europe this year, cutting imports and raising prices.

The newspaper quoted some analysts as expecting Russia to take similar steps on oil if the West follows through with the price cap plan.

But US officials have expressed confidence that Russia will continue to sell oil at lower prices and will not risk production cuts and the shutting down of wells that can be hard to open in some cases.

European officials said the European Union is still debating problems with the plan’s implementation because “the bloc lacks a central punitive body like the United States,” leaving it up to individual member states to encourage insurance and banking companies to stay in the market. rather than quit his job for fear of breaking the rules, according to the publication.