G7 and Australia move forward with price cap on Russian oil

Department of Finance Canada

Today, Canada, G7 partners and Australia are moving forward with a plan to weaken Putin’s ability to fund his illegal war against Ukraine by imposing a maximum price cap on seaborne Russian-origin crude oil.

As of December 5, 2022, the maximum price for seaborne Russian-origin crude oil will be US$60 per barrel. Buyers who do not abide by the price cap will not be able to obtain services, like shippers’ insurance, from companies in any of the Coalition countries (G7 partners and Australia).

This price cap mechanism has been carefully designed to reduce Russian revenues, and thus limit Russia’s ability to fund its war against Ukraine, while recognizing the supply chain limitations of global energy markets and minimizing negative economic spillovers. The mechanism also allows for adjustments so that the price cap could be shifted down.

Canada’s ban on imports of Russian oil-which came into force on March 10, 2022-remains in effect.

In addition to the price cap, signatories, including countries of the European Union, also reaffirmed their intent to phase out Russian oil and petroleum products from their domestic markets. This is a significant further expansion of the sanctions imposed since February 2022.

After the coming into force date, the Coalition will enforce the crude oil price cap and monitor its impact. It will also adjust it as appropriate by, for example, allowing the price cap to reflect downward changes to the average market price for Russian oil. The Coalition is also working on imposing a similar price cap in early 2023 on Russian-origin petroleum products beyond crude oil.

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