Although the level of the cap is unclear at this stage, a statement from the G7 on Friday, said the move was designed in order “to reduce Russian revenues and Russia´s ability to fund its war of aggression”.
It is thought the price cap will be implemented in December for crude oil and in February for so-called “refined products” as states begin to phase out Russian energy products fro mtheir domestic markets.
“Since (Vladimir) Putin’s brutal and unprovoked invasion of Ukraine the UK and our allies have imposed hugely damaging sanctions on the Kremlin war machine, pushing the Russian economy into a deep recession and putting the majority of Russia’s $640billion foreign exchange reserves beyond use,” current Chancellor Nadhim Zahawi, said.
“We are united against this barbaric aggression and will do all we can to support Ukraine as they fight for sovereignty, democracy and freedom.”
Although Italy, France and Germany all agreed to the cap, all 27 EU member states will need to agree to the newly announced energy cap for it to be implemented across the bloc.
US Treasury Secretary Janet Yellen said that a price cap on Russian oil agreed by Group of Seven (G7) finance ministers on Friday would help fight inflation while delivering a blow to Moscow’s ability to finance its war in Ukraine.
The price cap helps achieve "our dual goals of putting downward pressure on global energy prices while denying Putin revenue to fund his brutal war in Ukraine," Ms Yellen said in a statement.
Although multiple countries imposed sanctions on Russian exports, the country’s oil export volume rose by £606million in May due to increased prices caused by the war in Ukraine, the International Energy Agency said last month.
In order to cushion the blow from the block on Russian oil exports, the G7 has called on the OPEC states to increase production in order to cover the energy shortages in the market.