Leaders of the world's most developed economies on Tuesday agreed to explore ways to cap the price of Russian oil and gas as their economies grapple with soaring inflation fuelled by skyrocketing energy prices.
Members of the G7 — Britain, Canada, France, Germany, Italy, Japan and the US — said in a communiqué released at the end of their three-day summit in the Alpine German town of Elmau that they want to "explore further measures to prevent Russia from profiting from its war of aggression."
This includes the "feasibility of introducing temporary import price caps where appropriate," the statement adds.
Details on how it would work are scarce although the statement said one option for oil could be to bar services linked to the transportation of Russian seaborne crude oil and petroleum products globally, including financing and insurance, "unless the oil is purchased at or below a price to be agreed in consultation with international partners."
It is also unclear who would participate — the more countries sign up, the fewer alternatives Russia has to sell oil at a high price — and whether it could be extended to other producers with France believed to have been pushing for the cap to apply to others too.
The G7 leaders also called on producers to step up production to provide some relief on the market.
French President Emmanuel Macron said that "our objective is obviously to limit the effects of the crisis on all our citizens, our companies and to be able to restore the equilibrium on the energy market and bring prices down."
"Several initiatives have been launched which now need to be technically implemented but we have called for better coordination between buyers to talk together to producers who bear a huge responsibility given our collective dependence. Our desire is to be able to both free up more volume but also have a concerted discussion between large buyer countries to better hold down gas prices, oil prices, both crude oil and products processed from oil," he added.
The European Union, Canada and the UK have all taken measures to wean themselves off Russian fossil fuels as quickly as possible.
The EU's sixth round of sanctions, announced last month, banned Russian seaborne oil and will result in imports of Russian oil being cut by 90% by the end of the year.
An EU official assured that a price cap on oil wouldn't "require a new package or changing the sixth package" which took four weeks to negotiate with some landlocked member states vehemently opposed to a total Russian oil embargo.
A seventh package of sanctions, one that could include a gas embargo, appears unlikely any time soon with several EU leaders having already ruled it out. The bloc has however committed to slashing their imports of Russian gas by two-thirds before the end of the year.
The EU official said that although G7 leaders addressed price caps on gas, there remained "many questions that need to be discussed" because it is a "complex market" with leaders wary of "what will be the reaction" from Russia. Moscow has already partially or completely cut deliveries of fossil fuels to 12 member states.
The European Commission was tasked with looking at the feasibility of price caps in late May and was initially scheduled to present its findings in October. Asked whether the Commission could accelerate its work following the G7, a spokesperson told reporters on Tuesday "we are willing to speed up".