The Impact Of The Russian War On Ukraine, The G7 Will Limit The Price Of Oil

Oil Refinery (Photo: ANTARA)

JAKARTA - Groups of seven major world economies (G7), European Union (EU) and Australia plan to limit Russia's oil prices to 60 US dollars (approximately IDR 926.000) per barrel, the US government said on Friday, December 2 local time.

The plan was decided days before the implementation of a new mechanism meant to pressure Moscow over its war in Ukraine.

The Russian oil price restrictions, which took effect on Monday, December 5, will help limit the Kremlin's main sources of revenue to finance the war, while overcoming supply disruptions in the global market by pushing Russia's oil flow at a discounted price, US Treasury Secretary Janet Yellen said in a statement.

The announcement comes after 27 EU member states agreed to the Russian oil price limit, but there are still questions as to whether the price limit is low enough to provide a major blow to Russia.

The United States expressed support for the plan. White House national security spokesman John Kirby confirmed that Russia could see a "significant decline" in its oil sales proceeds, after setting a price of 100 US dollars per barrel.

Quoted from ANTARA, Brent crude oil, which is an international benchmark, has been trading around $85 per barrel recently. However, Russian crude is reported to have been trading below US$60 recently.

The level of the oil price limit can be adjusted later, depending on Russia's reactions and other factors, Kirby said.

Plans to limit Russian oil prices have been approved earlier this year by G7 member countries --England, Canada, France, Germany, Italy, Japan and the United States -- and EU.

Attention has recently been paid to EU discussions about the actual level of oil prices. Previously, Poland was reported to have delayed agreeing to the US$60 per barrel pricing agreement. A source at the EU said the mechanism in the deal was expected to keep the price limit at least 5 percent below market price.