The G7 intends to reduce the Kremlin’s oil revenues

The finance ministers of the G7 countries will discuss new measures on October 15 to increase pressure on Russia to reduce its oil export revenues. Several ideas have been prepared that should help reduce the Kremlin’s military budget.

According to the G7 statement, one possible option is to impose additional duties on imports from countries that continue to buy Russian oil. The United States has already implemented such actions, introducing similar measures against India.

Analysts warn that simply reducing Russian oil exports may be ineffective if other suppliers do not increase production. Otherwise, the shortage of resources will lead to higher global prices, negatively affecting Western countries’ economies and not reducing Moscow’s revenues.

Therefore, the G7’s main task is to convince other oil-producing countries, particularly Gulf countries, to increase production. In addition, it is necessary to encourage major consumers of Russian oil — India, Turkey, and EU countries — to reduce imports from Russia and turn to Saudi Arabia and the UAE for new supplies.

The Gulf countries are interested in increasing production, since production costs there are low, reserves are significant, and demand for oil remains strong. Riyadh has ambitious projects in other areas of the economy that have already created a budget deficit, so it seeks to increase its share of the global market.

However, the G7’s influence is limited by the strategic alliance between China and Moscow, which allows Russia to continue trading oil with China.

Experts estimate that if India, Turkey, and EU countries reduce imports of Russian oil by 2.3 million barrels per day, this could offset additional production from Saudi Arabia and the UAE, thereby significantly reducing the Kremlin’s revenues.

Russia currently exports about 7.3 million barrels of oil per day at an average price of about $56 per barrel. If sales fell to 5 million barrels per day and the price dropped to $40, the country would risk losing about half of its export earnings, worth about $76 billion a year.

The G7 ministers’ joint statement stressed their intention to “maximize the pressure on Russia’s oil revenues,” including sanctions, tariff barriers, import and export bans, and measures against states and companies that help circumvent these restrictions.

A final decision on the new sanctions package is expected at the annual meetings of the IMF and the World Bank in Washington on October 15.