G20 Ministers end meeting with no price cap on Russian oil

Finance ministers from the Group of 20 industrialized nations ended their meeting in Indonesia on Saturday without an agreement on a US proposal to cap the price of Russian oil.

Treasury Secretary Janet Yellen of the United States had gone to the gathering to solidify support for the incomplete plan. She said the proposal could be a powerful tool to mitigate the economic fallout of the war in Ukraine and curtail Russia’s ability to profit from soaring energy costs and further fund its military aggression.

The leaders of the Group of 7 nations had agreed last month in principle to consider the plan to tamp down global oil prices by imposing a discount on Russian oil, but the details of how such a mechanism would work remains unclear.

The Treasury Department said in a statement that in meetings on the sidelines of the event, Yellen “highlighted the importance of cooperation on a price cap on Russian oil in order to restrict revenue to Putin’s war machine and limit the impact of Russia’s war on energy prices.”

The support, or noninterference of, some of the countries at the larger meeting in Indonesia, including India and China, would be instrumental in the plan having its intended effect.

Yellen and other ministers at the meeting placed the blame for global food insecurity and spiraling energy prices squarely on Russia. Ukraine’s finance minister, Serhiy Marchenko, told his counterparts in a virtual address that Moscow’s war had “already made life in almost every one of your countries more difficult, more unstable and turbulent.”

Last week’s meeting of the Group of 20 foreign ministers also ended without a customary communiqué, after Russia’s foreign minister, Sergey Lavrov, walked out of the gathering. Russian representatives also attended the finance ministers’ meeting.

The United States has imposed a ban on the small amount of Russian oil that it imports. A bigger shock to Russian oil supply will occur at the end of the year, when the European Union is expected to phase in a similar ban, coupled with a prohibition on insurers providing coverage to ships that transport Russian oil around the world.

The price cap would create an exception to the insurance sanctions, allowing Russian oil to be sold at deep discounts to countries that have not put embargoes in place.

The United States is fearful that once the European ban takes effect, the removal of large quantities of oil from the global market could deal a severe blow to the world economy.

Analysts have calculated that such a depletion in supply could send oil prices to $200 a barrel or more, translating to Americans paying $7 a gallon for gasoline. Global growth could slam into reverse as consumers and businesses pull back spending in response to higher fuel prices and central banks, which are already raising interest rates in an effort to tame inflation, increasing borrowing costs even more.