According to U.S. and European officials, the G-7 nations are still looking for additional nations to join their efforts before entering more in-depth discussions about the specifics of the policy, two months after agreeing to investigate price caps on Russian oil sales.
“The coalition has to be broader, and this is the diplomatic phase [negotiators] are entering into,” said one European official, requesting anonymity to discuss sensitive deliberations.
The major democracies of the world have outlawed the import of Russian oil. They are currently negotiating a ban on shipping and insuring Russian oil to other nations unless the sale is made for less than a predetermined amount.
On September 6, 2022, in Vladivostok, Russia, Russian President Vladimir Putin will preside over a meeting of the State Council Presidium on the growth of the country’s tourism industry.
They want to keep Russian oil on the market to prevent supply disruptions while limiting the amount of money the Kremlin receives.
China, India, and Turkey, three major Russian oil importers, have not yet indicated whether they will participate in the coordinated price cap or engage in separate negotiations with Russia. The degree of influence Western countries have over price setting may depend on their participation.
“It’s premature to start discussing the price before the coalition comes together,” a senior Treasury official said.
Over the next two months, international leaders and financial officials will meet at various venues to discuss the mechanism, including the UN General Assembly in New York, meetings of the International Monetary Fund and World Bank in Washington, D.C., and multilateral summits abroad. By the time the Group of 20 countries – or, 19 with Russia excluded – meet in Bali, Indonesia in the middle of November, negotiators anticipate that a decision will have been made.
“It will be the expectation that the G-20 countries will have been able, by that time, to communicate their possible participation,” the European official said. Until then, no discussions of the specific price under which to allow sale of Russian crude oil, high-value refined products and low-value refined products have taken place among allies.
“We have notions of what figures can be, but it’s just figures without a strong technical ground,” the European official said.
G-7 negotiators announced their intention to pursue the price cap at the conclusion of the most recent Alpine summit, and they have since formalized that intention. The U.S. doesn’t necessarily need China or Russia to participate for the policy to have the desired effect, according to Treasury Secretary Janet Yellen.
“We’re already seeing this initiative pay off because countries that are buying Russian oil at greatly discounted prices,” Yellen said on MSNBC after meeting with G-7 negotiators on Sept. 2. “We’re having an impact.”
The Biden administration anticipates the price cap to take effect by the end of the year, according to a senior White House official.
(Adapted from ForexFactory.com)