How G7 Plans To Lower Energy Prices While Slashing Russia's Crude Oil Revenues

The Group of Seven (G7) finance ministers will hold talks this week on permitting global purchases of Russian oil at a capped price, a move the U.S. believes will ease energy market pressures and reduce overall Russian revenues from crude, reported Bloomberg.

What Happened: U.S. officials said Treasury Secretary Janet Yellen and her counterparts would discuss the plan further in a session on Friday. The measure would permit Russian oil buyers under a capped price to continue getting crucial services such as financing and insurance for tankers, it said.

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Why It Matters: U.S. officials have stated that permitting global purchases at or below a price cap would encourage other buyers to seek the same discount, and eventually ease shortages in the market, lower global benchmark prices and force Russia to give a further discount. 

After Russia’s invasion of Ukraine that sent crude prices soaring, the U.S. and its allies have grappled with how best to sanction the country. The G7, which also includes Germany, the UK, France, Italy, Japan and Canada, had pledged earlier this year to cut reliance on Russian energy.

Price Action: The United States Brent Oil Fund LP (NYSE: BNO) was trading over 3% down on Thursday. The Vanguard Energy Index Fund ETF (NYSE: VDE) was trading 0.65% lower.

White House Statement: “This is the most effective way, we believe, to hit hard at Putin’s revenue, and doing so will result in not only a drop in Putin’s oil revenue but also global energy prices as well,” said White House Press Secretary Karine Jean-Pierre according to the report.

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