G7 countries agree to impose price cap on Russian oil

Members of the G7 have agreed to impose a price cap on importing oil from Russia in a bid to hit Moscow's ability to finance the Ukraine war.

Finance ministers said the cap on crude oil and petroleum products would also help reduce global energy prices. The cap will be set at a level based on a range of technical inputs.

"We will continue to stand with Ukraine for as long as it takes_" the G7 said.

Russia has threatened to stop selling oil to countries that imposed price caps. "Companies that impose a price cap will not be among the recipients of Russian oil_" Kremlin spokesman Dmitry Peskov said.

The G7 (Group of Seven) consists of the United Kingdom_ the United States_ Canada_ France_ Germany_ Italy and Japan. The group is an organisation of the world's seven largest "advanced" economies_ which dominate global trade and the international financial system.

The oil price cap plan was "specifically designed" to reduce Russian revenues and its ability to "fund its war of aggression"_ the finance minsters said at the virtual meeting.

They also said they wanted to minimise the damaging economic fallout of the conflict_ "especially on low and middle-income countries".

The introduction of a price cap on Russian oil means countries that sign up to the policy will only be permitted to purchase Russian oil and petroleum products transported via sea that are sold at or below the price cap.

In the aftermath of Russia's invasion of Ukraine the price of oil soared and has remained at high levels_ meaning Russia has increase its revenues from the fossil fuel despite its export volumes falling.

The EU plans to impose an embargo on Russian crude oil from 5 December. It will apply to crude shipped by tanker and most piped supplies.

Although_ Russia's two major trading partner China and India may not follow G7 policy on Russian oil_ analysts say. They have not joined the Western sanctions targeting Moscow.