G7 leaders close to agreement on Russian oil prices

KRUN, Germany - The leaders of the Group of 7 nations are close to an agreement on price caps on Russian oil and are about to impose new economic penalties on Moscow to support Ukraine, Biden administration officials said on Monday. Treasury Secretary Janet L. Yellen has pushed aggressively for a limit on how much money Russia can earn by each barrel of oil it sells on the global market, reducing the fossil fuel revenues Russia is relying on to finance its war effort. It would try to regulate global oil markets - and hopefully bring down prices - by ensuring Russian oil continues to flow to consumers worldwide even as wealthy democracies increasingly impose import bans on Russian oil in their countries.

Countries finance ministers would be left to work out details of how the plan would be implemented, even with an agreement in principle. A final agreement would require complicated discussions that include private companies, like insurers and large financial firms, along with countries outside Europe and the United States that import oil from Russia.

The U.S. officials expressed cautious optimism on Monday that negotiators could work quickly to decide the details of the plan once G 7 leaders finalize an agreement in principle. Jake Sullivan, President Biden's national security adviser, told reporters at the summit that it's possible to be done quickly. The United States has already introduced a ban on Russian oil, and European allies are moving to ban most Russian oil and reduce gas imports by the end of the year. Any price caps would not interfere with existing bans. American officials don't want the bans to force millions of barrels of Russian oil a day off the global market, which could cause already high global prices and further fuel inflation for American consumers and their counterparts around the world. They hope to use those industries as a choke point to drive down Russian oil prices because Western banking, insurance and shipping companies facilitate much of Russia's oil exports to the rest of the world.

Russia's oil exports have fallen heavily under the sanctions, but its revenues from oil sales have been on the rise, a result of soaring fuel prices. Consumers are facing mounting pain at the gasoline pump. The combination has left G 7 leaders looking for ways to reduce Russian revenues and relieve energy price pressures.

The leaders are going to announce other economic penalties on Russia on Monday at their summit in the Bavarian Alps. The penalties include sanctions targeted at Russia's state-owned defense companies and new financial restrictions against individuals believed to have committed war crimes in Ukraine or stolen Ukrainian grain. The Biden administration estimates that they will be worth about $2.3 billion for Russian exports, including U.S. tariffs on 570 product groups.