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G7 To Cap Energy Prices To Stop Russia From Profiting From War With Ukraine

The G7 are looking at ways to curb energy prices, which may include caps on oil and gas, as leaders make a bold vow to prevent Russia from profiting from the aggressive war with Ukraine. 


In an official announcement released on the morning of the 28th June, G7 leaders said they would look to reduce Russia’s hydrocarbon revenues whilst limiting the negatives of high energy prices, especially on lower and middle income countries. 


Following in the footsteps of the USA. The G7 leaders said they want to explore the possibilities of temporary price caps on energy imports. 


Host of this year's G7 and German Chancellor, Olaf Scholz stated that ‘a lot of things will have to fall into place’ and that ‘it will need a lot of work’ for the idea of capping energy prices to work. He called the idea overall ambitious but not impossible. 


Scholz said the G7 were united and determined to stop Russia’s aggression, Scholz described Russia’s war against Ukraine as being a ‘threat to peace and security in the whole world.’ According to Scholz, the G7 agreed that Russia must not win the war, adding: ‘We will continue to drive up the economic and political costs for President Putin and his regime, and keep them high.’ 


The G7 pledged $29bn in support and an additional $2.8bn in humanitarian aid to Ukraine. As well as, proposing a new Marshall Fund to help Kyiv with reconstruction. However, campaigners criticised G7 leaders for the lack of climate change proposals and encouraging investment in gas production. 


The summit was held due to the rising alarm about the toll the war in Ukraine has on G7 economics. Scholz said that rising energy prices endanger security and stability in a lot of countries. G7 leaders said the conflict was ‘pushing up inflation to levels not seen for decades.’


The price cap idea came about by concerns that Moscow is benefitting from a surge in energy prices, despite the restrictions G7 countries have imposed on Russian energy imports. 


In the closing statement, the G7 leaders concluded they were working to make sure Russia does not exploit its position as a mass energy producer to profit from its aggression. They also agreed to finally explore Italian prime minister Mario Draghi's proposal to explore caps on gas prices, not just oil. 


G7 leaders said their minister would evaluate the feasibility of a price cap as a matter of urgency. But they have already been warned the scheme is complex and very intensive and it would put pressure on non G7 countries that import Russian oil. 


If these caps do go ahead it would face a huge obstacle in the EU, where sanctions require the consent of all 27 member states. 


Image Credit: Business Standard

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Tags: #russia #G7 #energy


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