Zaporizhzhia, 3 September 2022 (TDI): The members of the Group of Seven (G7) countries on Friday agreed to impose a price cap on purchases of Russian oil. It is an attempt to reduce Moscow’s ability to fund its war in Ukraine without further stoking global inflation.

The decision comes after the discussions at the group’s summit earlier this year that aims at solving one of the vexing global problems with sanctions against Russia.

Meanwhile, global oil prices have skyrocketed that is squeezing consumers in rich and poor countries alike and threatening to push Europe into recession.

The G7 ministers in a joint statement said “ The price cap is specifically designed to reduce Russian revenues and Russia’s ability to fund its war of aggression whilst limiting the impact of Russia’s war on global energy prices”.

The level of the price cap is not finalized yet by the G7 members. It will be decided in future talks with all participants, including non-G7 countries that may join the plan.

Moreover, Russia has threatened to stop selling oil to any country that adopts a price cap mechanism. Moscow’s spokesperson Dmitry Peskov said that the move would be an “absurd decision” and would “lead to a significant destabilization of oil markets”.

About G7

The G7 is an informal grouping of industrialized democracies. It includes the United States, Canada, France, Italy, Germany, Japan, and the United Kingdom.

The bloc meets annually and discusses issues related to global economic governance, international security, and energy policy.

Russia was part of this bloc from 1998-2014 when the bloc was known as the Group of Eight (G8). It was suspended following its annexation of Ukraine’s Crimea region.

More recently, the G7 has imposed coordinated sanctions on Russia in response to its war in Ukraine.