G7 cautiously backs Russian oil price cap, pledges to boost energy security, stability

G7 leaders on June 28 tentatively backed plans for an international cap on Russian oil prices in response to the Ukraine war while pledging to boost energy security and try to rein in price rises, alongside meeting climate goals.

Wrapping up talks in Germany, the leaders of the Group of Seven leading economies gave mixed signals on a proposed price cap, the latest focus of efforts to ramp up pressure on Russia over its invasion of Ukraine while trying to limit the economic fallout.

In a statement, the G7 said it welcomed EU efforts to "explore with international partners ways to curb rising energy prices, including the feasibility of introducing temporary import price caps where appropriate."

Speaking to the press, the meeting's host, German Chancellor Olaf Scholz, referred to a "possible" price cap on Russian oil, going on to say: "This is a very ambitious forward-thinking idea. We have to look into this further, we have to work it out before we can answer any other questions."

There was a more upbeat take on the idea from US Treasury Secretary Janet Yellen, who described the price cap idea as "a significant step in advancing our twin goals of sharply reducing Russian revenue and stabilizing global energy prices" and added her department would work "expeditiously" with international partners on the proposal.

"By working together to limit the price of Russian oil, we will further strengthen the existing sanctions imposed by the G7," Yellen said in a statement.

The G7 also pledged to consider a ban on services enabling transportation of Russian seaborne crude and oil products, "unless the oil is purchased at or below a price to be agreed in consultation with international partners.

Energy stability

On broader energy goals, the G7 pledged to work with the International Energy Agency to try to limit disruption stemming from the war in Ukraine, saying: "We are concerned about the burden of energy price increases and energy market instability, which aggravate inequalities nationally and internationally and threaten our shared prosperity."

"We will explore additional measures to reduce price surges and prevent further impacts on our economies and societies, in the G7 and globally."

The countries also pledged to redouble their efforts to achieve global climate goals, even as Germany's Scholz acknowledged a continued "short term" dependence on gas, much of which his country buys from Russia.

"While taking immediate action to secure energy supply and stop the increases in energy prices driven by extraordinary market conditions, we will not compromise our climate and biodiversity goals including the energy transition nor on our commitments to phase out our dependency on Russian energy," the G7 closing statement said.

"We need more ambition to achieve our climate targets," Scholz told the closing press conference, announcing plans for an international 'climate club' to be established by the end of the year dedicated to the issue. "We will also expand renewable energies and work even more intensively on this," Scholz said.