G7 agree to impose price cap on Russian oil
Finance ministers from the Group of Seven advanced nations have agreed they will “urgently” move towards imposing a price cap on Russian oil imports, aimed at stopping Moscow from raking in huge profits from soaring energy prices.
In a statement, G7 ministers said they would “urgently work on the finalisation and implementation” of the measure but left out key details of the plan.
They confirmed their commitment to the plan after a virtual meeting but said the per-barrel level of the price cap would be determined later “based on a range of technical inputs” to be agreed by the coalition of countries.
The G7 ministers said:
Today we confirm our joint political intention to finalise and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally.
The price cap is is “specifically designed” to reduce “Russia’s ability to fund its war of aggression whilst limiting the impact of Russia’s war on global energy prices, particularly for low and middle-income countries”, they said.
The G7 consists of Britain, Canada, France, Germany, Italy, Japan and the United States.
Key events
Alex Lawson
The G7 countries have agreed to impose a price cap on Russian oil in an attempt to stem the flow of funds into the Kremlin’s war coffers.
Finance ministers from the UK, US, France, Germany, Italy, Japan and Canada have agreed a plan to put a ceiling on Russian oil prices. The proposal would mean importers seeking shipping services and insurance cover from companies based in G7 and EU countries would need to adhere to a price cap to transport Russian oil.
The cap is expected to be introduced at the same time as planned EU embargoes on Russian oil kick in – on 5 December for crude and 5 February for refined products, such as diesel. The level of the cap is still being discussed.
UK chancellor Nadhim Zahawi said the decision followed a meeting earlier this week with US Treasury secretary Janet Yellen in Washington.
Yellen said the measure would be implemented “in the weeks to come” and represents a “major blow for Russian finances and will hinder Russia’s ability to fight its unprovoked war in Ukraine”.
Read the full story by Alex Lawson here.
Summary of the day so far
It’s 6pm in Kyiv. Here’s where we stand:
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Group of Seven (G7) finance ministers have announced they plan to implement a price cap on Russian oil. In a statement, G7 ministers said the cap was designed to reduce “Russia’s ability to fund its war of aggression” and said they would “urgently work on the finalisation and implementation” of the measure but left out key details of the plan.
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Prior to the G7 announcement, the Kremlin warned that imposing a price cap on Russian oil exports would trigger Russian retaliation. If G7 leaders decide to impose price caps on Russian oil, it will lead to significant destabilisation of the global oil market, Kremlin spokesperson Dmitry Peskov said.
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Ukraine’s military has claimed that Russian forces suffered “significant losses” in the southern region of Kherson following Kyiv’s counteroffensive launched earlier this week. Ukraine’s successes have been “quite convincing”, according to a spokesperson for the southern Ukrainian military command, who added that more “positive news” will likely follow “very soon”.
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Ukrainian troops have pushed back Russian forces at several points around Kherson, according to western officials. Officials estimate that about 20,000 Russian troops are in the pocket of the southern region, and caution that it is too soon to determine if Ukraine’s counterattack is working.
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The “physical integrity” of the Zaporizhzhia nuclear power station in south-eastern Ukraine has been “violated”, the head of the International Atomic Energy Agency (IAEA) has said. Rafael Grossi, who led a team of inspectors to the Russian-controlled plant on Thursday, said that although he would continue to worry about the plant, the situation was “more predictable” now.
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An expert team from the UN nuclear agency plan to stay at the Russian-held Zaporizhzhia nuclear power plant after gaining long-awaited access to the site on Thursday. “We are not going anywhere. The International Atomic Energy Agency (IAEA) is now there, it is at the plant and it is not moving – it’s going to stay there,” Grossi told reporters after returning to Ukrainian-held territory.
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Ukrainian officials have accused Russia of manipulating and distorting information shared with the IAEA. Ukrainian state-owned operator Energoatom said in a statement that Russian officials “are making every effort to prevent the IAEA mission from getting to know the real state of affairs. They spread manipulative and false information about this visit.”
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Russian defence minister Sergei Shoigu has accused Ukraine of “nuclear terrorism”. Pro-Russian proxy authorities in Zaporizhzhia have accused Kyiv of trying to smuggle “spies” into the IAEA inspection team posing as journalists.
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The head of the self-proclaimed Donetsk People’s Republic (DPR), Denis Pushilin, has restated the expansionist military aims of Russia’s invasion. “Our task is to liberate all Russian cities that were founded by Russian people during the time of the Russian Empire, and developed during the Soviet Union thanks to the help of our entire vast country,” Pushilin said. “This is not only the territories of Novorossia [the Donbas], but also much wider. It will not be any other way.”
Hello all, it’s Léonie Chao-Fong still here with all the latest developments from Ukraine. Feel free to get in touch on Twitter or via email.
The agreement by G7 finance ministers to impose a price cap on Russian oil will “curtail Putin’s capacity to fund his war” in Ukraine, Britain’s chancellor Nadhim Zahawi has said.
In a statement, Zahawi said further action against Putin was a “personal priority as Chancellor”.
Zahawi said:
Since Putin’s brutal and unprovoked invasion of Ukraine, the UK and our allies have imposed hugely damaging sanctions on the Kremlin war machine, pushing the Russian economy into a deep recession and putting the majority of Russia’s 640 billion dollars foreign exchange reserves beyond use.
He added:
We will curtail Putin’s capacity to fund his war from oil exports by banning services, such as insurance and the provision of finance, to vessels carrying Russian oil above an agreed price cap.
We are united against this barbaric aggression and will do all we can to support Ukraine as they fight for sovereignty, democracy and freedom.
G7 agree to impose price cap on Russian oil
Finance ministers from the Group of Seven advanced nations have agreed they will “urgently” move towards imposing a price cap on Russian oil imports, aimed at stopping Moscow from raking in huge profits from soaring energy prices.
In a statement, G7 ministers said they would “urgently work on the finalisation and implementation” of the measure but left out key details of the plan.
They confirmed their commitment to the plan after a virtual meeting but said the per-barrel level of the price cap would be determined later “based on a range of technical inputs” to be agreed by the coalition of countries.
The G7 ministers said:
Today we confirm our joint political intention to finalise and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally.
The price cap is is “specifically designed” to reduce “Russia’s ability to fund its war of aggression whilst limiting the impact of Russia’s war on global energy prices, particularly for low and middle-income countries”, they said.
The G7 consists of Britain, Canada, France, Germany, Italy, Japan and the United States.
Ukraine’s agriculture ministry has said grain exports are down 54.5% year-on-year in 2022-23 season so far, at 4.16m tonnes, Reuters reports.
The country’s grain exports have slumped since the start of the war because its Black Sea ports, a key route for shipments, were closed off. Three ports were unblocked at the end of July under a deal between Moscow and Kyiv, brokered by the United Nations and Turkey.
The government has said Ukraine could harvest at least 50m tonnes of grain this year, compared with a record 86m tonnes in 2021, because of the loss of land to Russian forces and lower grain yields.
Janet Yellen, the US treasury secretary, has said that a G7 price cap on Russian oil would help fight inflation while delivering a blow to Moscow’s ability to finance its war in Ukraine.
The price cap helps achieve “our dual goals of putting downward pressure on global energy prices while denying Putin revenue to fund his brutal war in Ukraine”, Yellen said in a statement.
Reuters reports that Japanese finance minister Shunichi Suzuki has also said he welcomed a G7 deal, and that it should be implemented quickly.
Energoatom, the Ukrainian operator of the Zaporizhzhia nuclear power plant (ZNPP), has posted to Telegram to say that reactor number five, which was shut down yesterday as an emergency precaution following shelling in the vicinity, has begun operating again. The statement said:
Power unit number five of the ZNPP, which was shut down yesterday morning as a result of another mortar shelling by the Russian occupying forces at the ZNPP site, was connected to the power grid at 1.10pm, and capacity is being added. Currently, two power units are operating at the station, which produce electricity for the needs of Ukraine. There are no comments on the operation of equipment and security systems. We will remind you that representatives of the IAEA mission continue their work at the Zaporizhzhia.
Dan Sabbagh
Ukrainian troops have pushed back Russian forces at several points around Kherson since Kyiv launched its long-awaited counteroffensive aiming to retake the southern province, according to western officials.
Officials estimate that about 20,000 Russian troops are in the pocket of the southern region, and caution that it is too soon to determine if Ukraine’s counterattack is working.
Western officials say Ukraine has “pushed back” Russian forces at “several points” around Kherson, but decline to give any further details. Estimate Russia has c20k troops in the Kherson pocket. Heavy caution it is too soon to determine if Ukraine attack is succeeding however.
— Dan Sabbagh (@dansabbagh) September 2, 2022
G7 poised to agree plan to impose price cap on Russian oil
G7 finance ministers are expected to firm up plans on Friday to impose a price cap on Russian oil aimed at slashing revenues for Moscow’s war in Ukraine but keeping crude flowing to avoid price rises, officials said.
The ministers from the club of wealthy industrial democracies are due to meet virtually and are likely to issue a communique that lays out their implementation plans.
“A deal is likely,” a European G7 official said, adding that it was unclear how much detail would be revealed, such as the per-barrel level of the price cap, above which complying countries would refuse insurance and finance to Russian crude and oil product cargoes.
Russian forces are suffering “heavy losses” in the face of Ukrainian resistance that has stalled Moscow’s advance and demonstrated the determination of the Ukrainian people to “retake their sovereign territory”, the UK’s national security adviser, Stephen Lovegrove, has said.
In a statement, Lovegrove said Britain will continue to provide Ukraine with humanitarian, economic and military assistance and that its support “will not waver”.
Ukraine’s resistance “has inspired the world and shown huge courage in the face of brutality”, he said.
Lovegrove said:
Now that courageous resistance has stalled the Russian advance and demonstrated the determination of the Ukrainian people and armed forces to retake their sovereign territory.
He added:
The risks around this terrible conflict continue as Putin finds he can’t make progress, his forces suffer heavy losses, and sanctions continue to degrade his war machine and take money out of the pockets of Russia’s richest people.
At the same time Russia is trying and failing to impose a veneer of legitimacy on the areas it temporarily controls, including through plans for staged sham referenda. It will not succeed.
The former Russian president Dmitry Medvedev has responded to comments by the head of the European Commission, Ursula von der Leyen, about putting a ceiling on the price Europe pays for Russian gas.
Russia will simply turn off gas supply to Europe if Brussels pushes ahead with a price cap on Russian gas, Medvedev wrote on Telegram.
The Kremlin has warned it will stop selling oil to countries that impose price caps on Russia’s energy resources.
Finance ministers from the Group of Seven are expected to firm up plans today to impose a price cap on Russian oil aimed at slashing revenues for Moscow’s war in Ukraine.
The ministers from the club of wealthy industrial democracies are due to meet virtually, and could issue a communique that lays out their implementation plans.
If G7 leaders decide to impose price caps on Russian oil, it will lead to significant destabilisation of the global oil market, the Kremlin said.
Kremlin spokesperson Dmitry Peskov told reporters today:
Companies that impose a price cap will not be among the recipients of Russian oil. We simply will not cooperate with them on non-market principles.
He added:
One thing can be said with confidence: such a move will lead to a significant destabilisation of the oil markets.
Peskov’s comments came as the head of the European Commission, Ursula von der Leyen, said it was time for the EU to consider a similar price cap on Russian gas purchases.
Such a cap would help fight back against Vladimir Putin’s attempts to manipulate the European energy market, Von der Leyen said.
World food prices have fallen for a fifth consecutive month, partly due to the resumption of exports from Ukraine’s Black Sea ports, according to the UN.
The Food and Agriculture Organisation (FAO) food price index, which tracks the monthly change in international prices of a basket of food commodities, reached an all-time high in March after Russian president, Vladimir Putin, ordered his troops to invade Ukraine.
Since then, the FAO index has been falling steadily, declining by 1.9% in August.
Vegetable oils fell by 3.3% in August, below their level a year ago. Cereals dropped by 1.4%, driven by a 5.1% drop in international wheat prices.
It came off the back of “improved production prospects in North America and Russia as well as the resumption of exports from the Black Sea ports in Ukraine for the first time in over five months of interruption”, the FAO said.
Russia suffering ‘significant losses’ in south, says Ukraine
Ukraine’s military has claimed that Russian forces suffered “significant losses” in the southern region of Kherson following Kyiv’s counteroffensive launched earlier this week.
Ukraine’s successes have been “quite convincing”, according to Natalia Humeniuk, spokesperson for the southern Ukrainian military command.
Humeniuk said:
The enemy suffers quite significant losses — losses in manpower have gone from tens to hundreds. Equipment also burns.
More “positive news” will likely follow “very soon”, she added:
We continue to destroy the enemy in terms of its logistics, capabilities, capacities. Ammunition warehouses explode, pontoon crossings explode. It means that the enemy’s logistics and transport connections are undermined to such an extent that they cannot raise reserves.
Operational Command South claimed that a range of targets had been struck, including a ferry crossing.
Moscow has denied reports of Ukrainian progress and said its troops had routed Ukrainian forces.
The Guardian could not independently verify either side’s claims.
Hello everyone. It’s Léonie Chao-Fong here again, taking over the live blog from Martin Belam to bring you all the latest from the war in Ukraine. Feel free to drop me a message if you have anything to flag, you can reach me on Twitter or via email.