The G7 countries (the G7 includes the US, Germany, Japan, UK, France, Italy and Canada) and Australia have agreed to set a fixed price for Russian oil, Reuters writes , citing sources.
Officials in the United States and other G7 countries have been in intense negotiations in recent weeks over the introduction of price caps on offshore oil supplies, which are due to take effect on December 5, according to sources.
"The coalition has agreed that the price cap will be a fixed price that will be reviewed regularly, and not a discount to the [price] index."
The source of the publication added that this will increase the stability of the market and make it easier to comply with restrictions in order to minimize the burden on market participants. At the same time, the price itself has not yet been set, it should be approved in the coming weeks. One interlocutor noted that countries would regularly revise the fixed price “as needed”. According to him, linking the price as a discount to any index would lead to too much volatility and possible price fluctuations. Another source of the publication said that the G7 is afraid of a floating price pegged to a level below Brent, as this could allow Russia to bypass restrictions by reducing supply.
In early November, the US Department of the Treasury softened the mechanism for the implementation of marginal prices for Russian oil, designed to reduce Russia's income from sales of energy resources. The alleged sanctions regime will not apply to all ships with Russian oil that were loaded before December 5 and will be unloaded before January 19, wrote The Wall Street Journal.
The Russian side has repeatedly stated that it will not supply oil to those countries that join the price ceiling. The largest buyers of Russian oil – China, India and Turkey – will definitely not join Western sanctions. However, the very fact of introducing such restrictions strengthens the negotiating position of Russia's partners, for whom it becomes much easier to get a significant discount for themselves. The average discount for a barrel of Russian oil since the beginning of the war was $20. The reduction in the supply of Russian oil to world markets has already significantly reduced budget revenues from oil.
All G7 countries were included by the Russian authorities in the list of "unfriendly states" in connection with the sanctions they imposed in response to the Russian invasion of Ukraine. In March, the Seven decided to reject Russian President Vladimir Putin's demand to accept payments in rubles for Russian gas supplies. Then the Minister of Economics and Climate Protection of Germany Robert Habek said that the decision was unanimous. In June, US President Joe Biden announced that the G7 countries intend to impose a ban on the import of Russian gold.