G7 members are to explore ways of curbing energy costs, including via possible caps on the price of oil and gas, at a summit that has been overshadowed by fears of a recession induced by rising inflation.
Officials on Monday evening settled on summit conclusions that seek to develop solutions to reducing Russia’s hydrocarbon revenues while minimising the negatives of high energy prices, officials said.
According to a draft text seen by the Financial Times, leaders will explore the “feasibility” of introducing temporary price caps on imports of energy — a reference to a US-led push for a ceiling on the Russian oil price. A G7 official said earlier that capitals agreed it was a good idea, but a “great deal of work” remained to be done to make it a reality.
The G7 leaders were meeting four months into a war in Ukraine which has pushed up the price of food and hydrocarbons, triggering fears of a global recession. The summit, hosted by Germany in the Bavarian Alps, is due to conclude on Tuesday.
The leaders condemned Monday’s “abominable attack” on a shopping mall in the Ukrainian city of Kremenchuk, in a statement soon afterwards, and warned that indiscriminate attacks on innocent civilians “constitute a war crime”.
“Russian President Putin and those responsible will be held to account,” they said.
The G7 leaders, who were addressed by Ukraine’s president Volodymyr Zelenskyy earlier in the day via video link, also said they would continue to provide financial, humanitarian and military support for Ukraine “for as long as it takes”.
“We will not rest until Russia ends its cruel and senseless war on Ukraine,” their statement said.
The move on price caps on Russian oil comes ways alongside a French proposal for higher global oil production, an idea that arose as G7 leaders sought to ease the looming energy crunch and alleviate the pressure on energy-importing employment.
French officials focused during discussions on Monday on ways of moderating prices via higher oil output. In particular, France wants to explore ways of bringing production from Venezuela and Iran, both subject to US sanctions, back on the market.
US president Joe Biden has already courted Nicolás Maduro’s authoritarian regime in Venezuela in an attempt to cool the market.
The G7’s conclusions underscore the deep alarm among its members’ leaders about the toll the Ukraine war is wreaking on their harvest. They are set to agree to have their ministers evaluate the feasibility of a price cap as a matter of urgency.
Officials say the cap could be enforced via limits on the availability of European services, including insurance for Russian oil shipments.
Officials caution that the scheme is highly complex and will need intensive technical work. It could face challenges in the EU where sanctions require the consent of all 27 member states.
“We are supportive of the basic structure,” said one G7 official about the ceiling on the Russian oil price. “But the details need to be hammered out.”
Another said that all G7 states agreed with the “basic idea that we have to reduce the sources of revenue for Russian oil”.
Macron’s calls for higher production came after Opec and its allies agreed earlier this month to accelerate oil production in July and August. The US has been putting pressure on the cartel’s linchpin, Saudi Arabia, to cool the crude price rally as it hangs over the global economy.
Biden is undertaking a trip to the Middle East in July, including a planned stop in Saudi Arabia.
Additional reporting by Victor Mallet in Paris