On September 2, 2022, US Secretary of the Treasury Janet Yellen issued a statement announcing the agreement by G7 financial ministers to finalize the implementation of a price cap on Russian oil. The agreement was part of the G7’s united response to Russia’s war of aggression against Ukraine and its harmful impact on the global economy. According to the G7 Financial Ministers’ Statement on the united response to Russia’s war of aggression against Ukraine (the G7 Statement), the leaders reaffirmed their shared commitment to coordinate sanctions imposed in response to the war against Ukraine and efforts to prevent Russia from profiting from the war. According to the G7 Statement, the price cap is specifically designed to reduce Russia’s ability to fund the war while limiting the war’s impact on global energy prices, particularly for low and middle-income countries. The G7 leaders also indicate that the price cap will be based on a range of technical inputs and will be decided by the full coalition before it is implemented. The financial ministers also continued to urge oil-producing countries to increase oil production in order to decrease volatility in energy markets and welcomed the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) to increase output in the midst of tight supply conditions.
According to Yellen, the implementation of a price cap is a critical step in driving global energy prices down and is “one of the most powerful tools we have to fight inflation and protect workers and businesses in the United States and globally from future price spikes caused by global disruptions.” Yellen also stated that the price cap’s impact can already been seen through Russia’s “hurried attempts to negotiate bilateral oil trades at massive discounts.”
Yellen Statement | G7 Leaders’ Statement