News Highlight
Russian crude is priced at a discount to the international Brent benchmark, and the G7 wants to keep that spread wide to keep down Russian oil revenue.
Key Takeaway
- The Group of Seven countries is working to cap the price of Russian oil in an attempt to limit Russia’s ability to fund its invasion of Ukraine.
The G7 countries.
- The Group of Seven (G7) is an intergovernmental political forum made up of the Seven advanced economies of:
- The United States
- Japan
- Germany
- Britain
- France
- Italy
- Canada
What’s the level of the price cap?
- Russian crude is priced at a discount to the international Brent benchmark, and the G7 wants to keep that spread wide, to keep down Russian oil revenue.
- For these, the officials have been talking about a $40-$60 per barrel range for crude.
- The introduction of a price cap on Russian oil means countries that sign up for the policy will only be permitted to purchase Russian oil and petroleum products transported via sea that are sold at or below the price cap.
- Coalition members with long economic and military relations with Russia could push for a higher cap.
India-China Approach:
- China and India, major trading partners for Russia, may not follow the G7 policy on Russian oil. They have not joined the Western sanctions targeting Russia.
The G7 and India.
- In 2022, India was one of the six special invitees to the G7 Summit under the German presidency.
- In 2021, under the presidency of the UK, India was invited along with Australia, South Korea, and South Africa as special invitees.
- At the 2020 G7 Summit in the USA, the president of the United States mentioned expanding the G-7 to include nations like Australia, South Korea, and India.
- India also attended the 45th G-7 Summit in Biarritz, France in 2019, as a special guest.
Relevance of G-7 to India
- India’s appearance at the G7 Summit as a special invitee signifies India’s rising global status in the international economy.
- India’s participation in the G7 summit signifies India’s status as the fastest growing emerging economy and India’s progress towards an advanced economy.
- The G7 has three of its members as permanent members of the UN Security Council. They have clout on the world stage. This may benefit India in the future.
- Through this organisation,India can advocate for ideas like the democratisation of international institutions to the rest of the world.
How the Group of Seven (G-7) Works
- The major purpose of the G-7 is to discuss and sometimes act in concert to help resolve global problems, with a special focus on economic issues.
- The G-7 has also launched initiatives to fund issues and relieve crises where it sees an opportunity for joint action. Those efforts include several aimed at debt relief for developing nations.
- In 1996, working with the World Bank, the G-7 launched an initiative for the 42 heavily indebted poor countries (HIPC), along with a Multilateral Debt Relief Initiative (MDRI), a 2005 pledge to cancel the International Development Association debt of countries that have gone through the MDRI program.
- In 1999, the group also decided to get more directly involved in “managing the international monetary system” by creating the Financial Stability Forum (FSB)
Content Source: The Indian Express