The cap is designed to curb Russia’s revenue from countries who are importing oil. The UK has already issued an import ban on Russian crude oil and will introduce the new cap, which will affect insurance, shipping and brokerage, from December 5.
Chancellor Jeremy Hunt said: “The UK will stand with Ukraine and her people for as long as Putin’s war continues.
“We will not waver in our support and we will continue to look for new ways to clamp down on Putin’s funding streams wherever we can.”
The EU presidency, held by the Czech Republic, tweeted that “ambassadors have just reached an agreement on price cap for Russian seaborne oil”, though the decision still needs approval through formal procedures.
Russia’s Urals crude blend has been trading at about $70 a barrel, a discount to Brent crude, the global benchmark price, which was at $86.50 a barrel on Friday night.
The cap is higher than Ukraine and Poland had been calling for but lower than some states proposed.
On Sunday, the OPEC cartel and its allies including Russia are due to meet to decide on future production.
European Commission President Ursula von der Leyen said the price cap would significantly reduce Russia’s revenues.
“It will help us stabilise global energy prices, benefiting emerging economies around the world,” von der Leyen said on Twitter, adding that the cap would be “adjustable over time” to react to market developments.
The G7 price cap will allow non-EU countries to continue importing seaborne Russian crude oil, but it will prohibit shipping, insurance and re-insurance companies from handling cargoes of Russian crude around the globe, unless it is sold for less than the price cap.
US Treasury Secretary Janet Yellen said the cap will particularly benefit low- and medium-income countries that have borne the brunt of high energy and food prices.
“With Russia’s economy already contracting and its budget increasingly stretched thin, the price cap will immediately cut into Putin’s most important source of revenue,” Yellen said in a statement.
Measures on services for transportation of refined oil will come into force on February 5, 2023 in line with the EU’s own measures.