The finance ministers of the US, UK, France, Germany, Italy, Canada and Japan will formally give their political support for such a move in a virtual meeting on Friday afternoon, according to five officials briefed on the matter. the conversations. However, the level of the price cap is still under discussion, they said. The cap mechanism will be implemented at the same time as EU embargoes on Russian oil imports, two of the officials said. The measure will take effect on December 5 for crude and on February 5 for refined products. The plan is based on an incentive system under which importers seeking insurance coverage and shipping services from companies based in G7 and EU countries to transport Russian oil will have to adhere to the price cap. Although backed by the European Commission, the scheme still needs support from EU member states as it will require amending the bloc’s sixth package of sanctions sealed after hard-fought negotiations. Officials also said that support from third countries that buy large quantities of Russian oil, such as India, would be important to make the cap more effective. A European official expressed hope that other countries would join the initiative in the coming days, adding that the level of the price cap would be set jointly by all participating states. “A price ceiling. . . it ensures that every country can get the lowest possible price, and that’s good for the world,” said James O’Brien, sanctions coordinator at the US State Department. Energy prices jumped after Russia’s decision to launch a full-scale invasion of Ukraine in February. This was followed by Western economic sanctions against Moscow and moves by countries to stop buying Russian oil. The price hikes have given the Kremlin a windfall from exports. Over the past three months, oil prices have fallen, in part as Russian exports held up better than expected, alongside fears that rising gas prices could trigger a recession in Europe. Brent crude, the international benchmark, has fallen from around $120 a barrel in early June to around $94 a barrel, close to the level it was on the eve of Russia’s invasion of Ukraine. Prices rose about 2 percent on Friday. The G7 had agreed in June to explore ways to limit Moscow’s revenue without raising world prices.

Since then, US officials have worked to find consensus within the G7 on the contours of the cap and how to implement it. Oil industry executives and some G7 government officials have expressed skepticism about how the cap would work and whether enough countries would adopt it. Last month, German Chancellor Olaf Scholz, whose country holds the rotating presidency of the G7, said of the proposal: “It only works if it is organized globally. You cannot do it unilaterally but only in close cooperation with many others. Otherwise it will come to nothing.” Meanwhile, marine insurers have privately expressed concern about using insurance as a mechanism to enforce the cap, given that insurers do not typically track the negotiated price of a cargo. Executives and officials have acknowledged that the fear of breaching the terms of the cap could mean insurers over-indemnify and pull cover from a wider range of ships. Russia threatened on Thursday to stop selling oil to any country that adopts a price ceiling mechanism. Kremlin spokesman Dmitry Peskov said Friday that the move would be an “absurd decision” and would “lead to significant destabilization of oil markets,” according to Interfax. When asked about this threat, O’Brien said: “Russia needs to keep its energy machinery going and it needs the money. What she chooses to do is her decision.” Saudi Arabia, which leads the OPEC+ oil producer alliance with Russia, has warned the group may have to cut output if prices remain “volatile” and worries the market is underestimating the impact of tougher Western sanctions on Russian oil supplies later this year. . The kingdom fears that a sharp drop in Russian production would be difficult to cover by other OPEC+ countries as there is limited spare capacity. OPEC+ is due to meet on Monday to discuss production policy for the coming months, having now restored overall output to pre-pandemic levels. Additional reporting by Max Seddon in Riga and David Sheppard in London