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Why in the News?
Recently, the G 7 Finance Ministers agreed to impose a price cap on Russian oil.Key Points:
About the Price cap plan:- It is a form of economic regulation that establishes an upper limit on the prices that a utility provider can charge.
- The price cap plan is the latest of the sanctions proposed by Western countries against Russia.
- It is expected to be finalised when G-20 countries meet in Bali in November, and will go into effect on December 5.
- Russian crude is priced at a discount to the international Brent benchmark and the G7 wants to keep that spread wide, to keep down Russian oil revenue.
- Members:
- The G7 nations wants to enlist other countries, including India and China.
- For countries that join the coalition would not buy Russian oil unless the price is reduced to where the cap is determined.
- For countries that don’t join the coalition, they would lose access to all services provided by the coalition countries including for example, insurance, currency payment.
- Control inflation globally
- It will cut the price Russia receives for oil without reducing its petroleum exports.
- Hurt the Russian economy and its ability to fund the war in Ukraine
- Russia would not supply “anything at all” if it contradicts Russian interests.
- It could stop supplies of gas, oil, coal, heating oil… leaving European countries to “freeze”.
- So far, India has not obliged, and there is little indication that is likely to join the plan.
- India’s oil intake from Russia has soared 50 times over since the war started.
About G7:
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