BRUSSELS — G7 countries will be ready with all the operational details of a price cap on Russian seaborne crude oil by Dec. 5, when the measure is to kick in, even though many details now remain to be settled, a senior U.S. official said on Friday.
Speaking to reporters during his visit to Brussels, U.S. ambassador James O’Brien of the U.S. State Department who heads the coordination of sanctions against Russia, said technical talks were underway on issues of pricing and governance of the cap, but declined to go into more detail.
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“The key date is Dec. 5. I think the price cap has been discussed for long enough that market participants understand that it is coming and they’re providing views on the best way to implement it,” O’Brien said.
The price cap, backed by the United States, Japan, Britain, Canada and the European Union (G7), will not allow shipping and insurance companies to provide services for tankers carrying Russian crude unless the oil was sold at or below a set price.
The maximum price, which is still to be set by the G7, is to be just above Russian production costs to limit Moscow’s revenues from oil sales and reduce its ability to finance its invasion of Ukraine.
But insurance and shipping companies, wary of breaking the future price cap so as not to become subject to secondary sanctions themselves, say they also need to know, among other things, at which point the sales price would be recorded, how it would be verified and what happens to a cargo when there are objections raised.
O’Brien said the whole package would be ready in time. “It would certainly be ready by Dec. 5 and we’ll address those issues,” he said.
U.S. Secretary of State Antony Blinken, speaking to reporters after a two-day G7 meeting in the western German town of Muenster, said the price cap will help limit Russia’s gains from energy sales. “Russia will make whatever decisions it makes but I think it will have an interest in continuing to sell energy,” Blinken said.
“This is a good mechanism for both ensuring that energy remains on the market, but the gains that Russia gets from it have a ceiling.”
Asked if he could assure the consumers that the mechanism wont lead to an increase in gas prices, he said: “We will see how this plays out.” (Reporting by Jan Strupczewski in Brussels and Humeyra Pamuk in Muenster, Germany; Editing by Louise Heavens, Kirsten Donovan)