G7 finance ministers are expected to finalize plans on Friday to impose a price cap on Russian oil in order to reduce revenues for Moscow’s war in Ukraine while keeping crude flowing to avoid price spikes, according to G7 officials.

The ministers from the club of wealthy industrial democracies are expected to meet virtually and issue a communique outlining their implementation plans.

“A deal is likely,” a European G7 official said, adding that it was unclear how much detail would be revealed, such as the per-barrel level of the price cap, above which complying countries would refuse insurance and finance to Russian crude and oil product cargoes.

On Thursday in Washington, British Finance Minister Nadhim Zahawi expressed optimism that G7 finance ministers will “have a statement that will mean that we can move forward at a pace to deliver this.”

“We want to get this oil price cap over the line,” he told a think tank event in Washington a day after discussing the cap with U.S. Treasury Secretary Janet Yellen.

Despite falling oil export volumes, Russia’s oil export revenue increased by $700 million in June from May due to higher prices caused by its war in Ukraine, according to the International Energy Agency last month.

Western leaders agreed in June to look into imposing a cap on how much refiners and traders can pay for Russian crude, a move Moscow says it will oppose and will thwart by shipping oil to states that do not follow the price ceiling. more info

White House spokeswoman Karine Jean-Pierre declined to comment on the G7’s price cap plans, stating that she did not want to “get ahead of that meeting.”

The G7 is made up of the United Kingdom, Canada, France, Germany, Italy, Japan, and the United States. Some EU officials have stated that the cap requires broader support and have questioned whether it can be implemented without the participation of major oil consumers China and India, both of which are unlikely to support the plan.

Other G7 officials, however, have stated that China and India have expressed interest in purchasing Russian oil at even lower prices in accordance with the cap.

The cap would depend heavily on rejecting London-brokered shipping insurance, which covers roughly 95 per centof the world’s tanker fleet, as well as financing for cargoes priced above the cap. Analysts, however, believe that alternatives to the cap can be found, and that market forces may render it ineffective.

Another G7 official stated that the group wants to “show there’s momentum on this” before the European Union imposes a regional embargo on Russian crude on December 5.

The US Treasury has expressed concern that the EU embargo will cause a rush for alternative supplies, pushing global crude prices up to $140 per barrel, and it has been pushing for the price cap since May as a way to keep Russian crude flowing. In anticipation of the EU embargo, Russian oil prices have risen, with Urals crude trading at a $18-to-$25 per barrel discount to benchmark Brent crude, down from a $30-to-$40 discount earlier this year.

(Adapted from USNews.com)

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