Negotiators — especially those from the US and Italy — are seeking a system that limits the flow of money to Russia while allowing oil’s availability to large buyers, like China and India, in order to avoid further price shocks.
Yet the details of how a price cap would be implemented or what level it would be set are not expected to be resolved at the gathering. Instead, leaders will direct finance ministers to work on figuring out the details in the weeks and months ahead, a senior Biden administration official said.
A political agreement to explore the option has been agreed, so it will be mentioned as an idea in the final communique, according to a G-7 official.
The US has suggested the cap could work by applying restrictions on insurance and other services needed to transport Russian oil.
The mechanism would allow oil to be shipped if it’s sold below an agreed threshold. Such an approach would require the European Union to rework sanctions that were only agreed last month after weeks of negotiations. It’s also unclear how effective the concept would be — one official has said EU sanctions would probably have a bigger impact.
There is also a lot of skepticism in the oil market about how something like this could work.