G7 countries are pushing for an oil price cap - Moscow reacts angrily and warns

Created: 09/03/2022, 09:01

By: Marcus Mäckler

The Druzhba Pipeline.

Her name means "friendship".

© Patrick Pleul/dpa

The high energy prices are painful for many countries - at the same time they bring Putin billions.

The G7 countries now want to enforce a price cap for Russian oil.

Munich – At Gazprom, the tills are ringing, and not too short.

The Russian state-owned company reported a net profit of 42.6 billion euros these days – for the first half of 2022 alone. That is more than in the entire previous year, a record value, half of which is to flow into the Russian state budget – i.e. also into the war chest.

The Kremlin benefits not only from the high gas prices, but also from the sharp rise in oil prices.

Meanwhile, contrary to what was announced, no more gas will flow from the Nord Stream 1 Baltic Sea pipeline.

G7 countries are pushing for a price cap for oil - more and more support

There are several reasons for this evil: among them the gas shortage to Europe deliberately used by Putin, but also the EU's announced oil boycott: Russian deliveries are to be reduced by around 90 percent from December, and the announcement alone caused prices to rise.

In the end, however, they fell again.

Nevertheless, in the short term, the sanctions are paying off for the Kremlin.

The G7 countries are therefore working on ways to stop spiraling costs.

The idea: a price cap for oil.

The possible measure now has many advocates.

EU Commission chief Ursula von der Leyen, for example, said on ZDF on Thursday that she thinks "an international, global cap on Russian oil that can be sold by ship worldwide is right".

Since the G7 summit in Elmau, efforts have been made to convince other countries.

The USA pushed for it early on, and Germany – skeptical at first – is probably also on board.

Video: "Energy as a weapon" - Gazprom is also turning off the tap on France

Oil prices: Market should be relieved by price caps

Russia should therefore be obliged to sell its oil to large buyers such as India at significantly lower prices than now.

The tense market, it is hoped, could relax somewhat as a result.

In order to push this through, US Treasury Secretary Janet Yellen's idea of ​​starting with insurance cover for oil transport is apparently being discussed, among other things.

Before the ships cast off, the shipping companies take out policies so that they are not left blank in the event of damage;

the vast majority of these insurance transactions are handled by a company in London.

In the future it could mean: You only get policies if the oil price is below a certain limit.

On Friday, G7 finance ministers said they were "urgent" to implement a price cap and were "seeking a broad coalition to maximize effectiveness."

They have not yet decided on a height for the upper limit.

Von der Leyen also emphasized that a cap would only work if as many states as possible participated.

You are on the right track there.

All other countries will “be able to make life difficult because the ships that transport the oil or the insurance companies that are responsible for these transports are largely in the hands of the countries that are participating in our oil cap”.

Among those who refuse is China, which is on Moscow's side despite the war in Ukraine.

In view of the drastic inflation, many citizens are tightening their belts.

The traffic light wants to relieve the energy crisis - the news ticker.

Russia warns of oil price cap and announces delivery stop

The Kremlin is watching the West's deliberations closely - and is warning.

The very idea of ​​a price cap is "absurd," says Deputy Prime Minister Alexander Nowak, according to the Ria Nowosti news agency.

Countries that go along with this will no longer supply Russia with oil.

"It is the European and American consumers who will primarily pay for this," emphasized Nowak.

Kremlin spokesman Dmitry Peskov warned of a "destabilization of the oil markets".

Russia is still supplying its oil to European countries, as the announced embargo will only come into effect at the beginning of December.

Even then, the Russian oil well will not dry up completely.

Because the embargo only affects crude oil deliveries that come by ship.

That's the biggest part, but not everything.

Exceptions are possible for oil flowing through the Druzhba pipeline to Central Europe.

States such as Hungary, Slovakia and the Czech Republic, which would find it difficult to replace Russian oil supplies in the short term, had pushed for this.

If politics has its way, the price cap should be implemented quickly.

Some oil market analysts doubt its usefulness - the G7 apparently not.