G7 Coalition Agrees To Set Fixed Price For Russian Oil: Report

U.S. officials and G7 countries have been in intense negotiations in recent weeks over the unprecedented plan to put a price cap on sea-borne oil shipments, which is scheduled to take effect on Dec. 5

The Group of Seven rich nations and Australia have agreed to set a fixed price when a cap on Russian oil prices is finalized later this month, rather than adopting a floating rate, sources said on Thursday.

US officials and the Group of Seven nations have been conducting intense negotiations in recent weeks over the unprecedented plan to set a sea price cap.

The transported oil shipments, which are due to come into effect on December 5, are to ensure that EU and US sanctions aimed at limiting Moscow's ability to finance its invasion of Ukraine do not stifle the global oil market.

The consortium agreed that the price cap would be a flat rate that is reviewed regularly rather than a discount on an index,

“This will increase market stability and simplify compliance to reduce the burden on market participants,” said a source from the alliance, who was not authorized to speak publicly.

Several sources said the initial price has not been set, but it is due in the coming weeks.

The source said the coalition partners agreed to review the fixed price regularly and revise it as needed, without revealing further details.

The source added that linking the price as a discount to some indicators would have led to a lot of fluctuations and possible price fluctuations.

A second source familiar with the discussions said the alliance was concerned that a floating rate pegged below the international benchmark Brent crude could enable Russian President Vladimir Putin to manipulate the mechanism by cutting supplies.

Vladimir Putin could benefit from the floating price system because the price of his country's oil would also rise if Brent crude rose due to oil cuts from Russia, one of the world's largest oil producers.

The downside of the agreed-upon fixed-rate system is that it will require more coalition meetings and bureaucracy to review it regularly

The source said.

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