The G7 foreign ministers of Great Britain, Germany, Italy, Canada, France, Japan, and the United States are exploring steps to reduce reliance on Russia for civilian nuclear products and related materials, while also considering a ban on Russian oil transport services. In a joint statement, they attribute Russia’s use of energy exports as a tool of political leverage and express concerns that the Russian Federation can no longer be counted on as a dependable energy supplier.
“We are prepared to examine a range of options, including a comprehensive ban on all services that enable the global shipment of Russian oil and petroleum products”, the statement asserted.
On the UK government site, the statement notes that as Russia’s share of energy resources in domestic markets declines, the G7 will pursue solutions aimed at reducing Russia’s hydrocarbon revenues and stabilizing global energy markets, while steering clear of causing hardship for low- and middle-income nations.
An exception is proposed for Russian oil bought at or below the price agreed with international partners.
Additionally, the G7 nations intend to lessen their dependence on civilian nuclear products and associated goods from Russia.
On July 27, US Republican Senator Marco Rubio introduced legislation that would sanction any entity that insures or registers tankers transporting oil or liquefied natural gas from Russia to China. Rubio argues that China supports Moscow’s actions in Ukraine by purchasing Russian oil. The bill has backing from Senators Rick Scott and Kevin Kramer.
oil embargo
The European Union imposed its first oil-related sanctions on Russia on February 24, corresponding with the launch of Russia’s military actions in Ukraine. The bloc banned the supply of goods, equipment, and technologies used in oil refining. The United States imposed sanctions on Gazprom Neft, Transneft, and imposed personal restrictions on Rosneft chief Igor Sechin, with the EU extending sanctions to Rosneft, Transneft, and Gazprom Neft on February 28. In subsequent steps, the U.S. introduced export controls on oil and gas equipment used for Russia’s oil production.
Norway, Switzerland, and other nations joined similar restrictions at various times.
On March 8, President Joe Biden announced a ban on the supply of oil, gas, and coal from Russia. At the same time, the United Kingdom pledged not to purchase Russian energy sources, including oil, through the end of the year. Canada joined the sanctions on March 11. By March 15, the European Commission broadened penalties to Rosneft, Transneft, and Gazprom Neft. On April 6, the UK banned the export of equipment for oil production and refining, including catalysts. On April 9, the United States banned the import of energy products from Russia, including oil.
By June 3, in the sixth package of sanctions, the EU moved to a partial embargo on Russian oil, with a plan to shift away from Russian crude within six months and toward petroleum products within eight months. The embargo also targeted oil and related products shipped by sea from Russia.
Meanwhile, the ban on crude oil shipments was staged with a six-month delay, and a longer eight-month window applied to petroleum products. Temporary exemptions were granted to Hungary, Slovakia, Bulgaria, and Croatia. The sanctions also allowed continued Russian oil transport by pipelines and permitted certain offshore operations for some countries. Canada added a ban on oil transport by tankers under its flag on June 8.
“We will not work at your detriment”
In June, reports emerged that the G7 leaders were considering a price cap on Russian oil. Discussions included the possibility of a sea-based ban if costs surpassed the agreed ceiling. By late July, a ceiling was anticipated, with plans to implement it by December 5, 2022. There was broad international dialog, but full alignment between the European Union and the United States remained elusive as negotiations continued with other partners.
US Treasury Secretary Janet Yellen held constructive talks with her Indian counterpart on July 18, as reported by Reuters. India indicated reservations but did not oppose the concept outright. Earlier, Yellen had productive engagement with other nations on the sidelines of the G20 summit in Indonesia.
On July 20, Deputy Prime Minister Alexander Novak of Russia warned that if Western price caps make fuel extraction unprofitable, Moscow would halt energy deliveries to those complying with restrictions. He suggested the cap could trigger market instability, resource shortages, and higher prices.
Yellen contends that price caps are among the strongest tools to address high energy costs faced by people in America and around the world. She believes such caps could reduce Russia’s revenue while also lowering energy costs overall. The aim, she notes, is to set a ceiling that keeps Russia able to extract and sell its energy resources at sustainable levels for the world market.
Western policymakers have pursued these steps after the European Union imposed an embargo on Russian pipeline oil, a move that contributed to a surge in fuel prices. Russia redirected resources toward alternative buyers such as India and China, while Moscow sometimes offered oil at discounted rates to maintain market presence.