Australia will join the world’s largest economies by imposing a price cap on Russian oil in a bid to increase financial pressure on Russian President Vladimir Putin as his military suffers a series of setbacks in eastern Ukraine.
The federal government will sign the cap when United States-led G7 nations impose controls later this year in hopes of keeping oil prices low without cutting supplies.
But the cap design is controversial and likely won’t prevent countries like India and China from buying Russian oil, though it could force Russia to offer a discount to its trading partners and thereby reduce revenues for Putin and his government.
Australia already has a total ban on the import, purchase and transportation of Russian oil, gas and coal under sanctions imposed after Putin ordered Ukraine in February, suggesting his support for the G7 price cap will have little impact on the economy. market would have.
But the move offers support to Ukraine after Deputy Prime Minister Richard Marles indicated on Sunday that he wanted to continue military aid for the country’s fight against the Russian army.
With sanctions against Russia likely to be a key issue for G20 countries at a Bali summit in November, Australia’s decision adds momentum to the oil price cap in hopes of getting other countries to join the effort. to close.
The European Union and the United Kingdom have decided to ban their insurers from covering Russian oil shipments, making it too risky and expensive for shipping companies to ship the oil and concerns about global shortages and price hikes.
The G7 nations — the US, Britain, Japan, Italy, Germany, France and Canada — agreed earlier this month on an additional mechanism to exempt insurers from the ban when the price of the oil falls below the proposed limit. , and saw this as a way to keep the price down while still punishing Russia.