The Group of Seven advanced economies on Friday decided to set a cap on the price of Russian crude oil at $60 per barrel, ending months of talks over the new measure intended to hit Moscow's major source of revenues as the war against Ukraine drags on.

The price limit on seaborne Russian oil will enter into force on Monday or soon thereafter among the "Price Cap Coalition" formed by Australia and G-7 members such as Britain, Japan, the United States and the European Union.

Brent crude oil, the international benchmark, has traded at around $85. But critics have said the price cap may not have much impact on Russia's oil revenues, citing its flagship crude that has reportedly fallen below $60 recently as concerns grow over China's economic outlook due to coronavirus outbreaks.

Under the price cap mechanism, the members of the coalition will not provide insurance, finance and other services for maritime transportation of Russian crude oil unless purchasers buy the oil at or below $60 per barrel.

From Feb. 5, seaborne Russian petroleum products will also face a price cap that will later be announced.

The coalition members said in their joint statement that they commit to "closely monitoring the effectiveness" of the cap and "will be prepared to review and adjust the maximum price as appropriate."

An EU source said the price will be reviewed every two months, with an adjustment mechanism in place to keep the price cap at least 5 percent below the market level.

White House national security spokesman John Kirby told reporters that $60 is "appropriate" and is expected to have the desired effect of limiting President Vladimir Putin's ability to use oil profits to fund his war machine.

Countries that are not part of the coalition are also expected to be affected by the measure, given the G-7 members' "dominant role" in the maritime services industry, especially insurance, according to the U.S. Treasury Department.

"Once the price cap is in place, any importer of Russian oil that pays a price above the cap will have to do so using services exclusively from companies outside the coalition -- which represent only a fraction of the market and are often more expensive and less reliable," the department said.

An idea to explore such a price limit was initially agreed in June by the leaders of the G-7, which consists of Britain, Canada, France, Germany, Italy, Japan and the United States, plus the EU.

As Russia's war on Ukraine, which began in February, has pushed up energy prices around the world and created economic hardships especially to poorer countries, the G-7 has said one of its intentions has been to draw up a price cap system that would encourage the flow of discounted Russian oil into global markets.

The price cap coalition is not joined by countries such as China and India, which have close ties with Moscow and have imported Russian oil.

A senior Treasury official said Russia could face tougher negotiations with China and India simply due to the existence of the cap as any importer would usually seek "the best possible deal."

The G-7 and Australia have already pledged to ban or phase out Russian oil imports, and the commitment remains unchanged by the rollout of the price cap, they said in their statement.

The latest announcement came just hours after EU reached a deal on the actual level of the price cap, with Poland, which had called for a tougher mechanism for Russia, agreeing to come on board.

European Commission President Ursula von der Leyen tweeted that the EU agreement, coordinated with other G-7 members, will "reduce Russia's revenues significantly."

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