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The G7 plans to cap the price of Russian oil. A new sanction in perspective against Moscow to dry up the financing of the war in Ukraine. And also the last track on the table to solve the puzzle of the global energy crisis.
By sanctioning Russian oil and gas, Westerners find themselves trapped. Today they want to increase the pressure on Vladimir Putin. And at the same time preserve their supply, at a price that is bearable for households and businesses, and therefore for their economy.
With 20% of the world’s oil production now subject to sanctions, in addition to that of Russia, that of major producers such as Iran and Venezuela, consumer countries know that a more severe sanction on Russian hydrocarbons risks to send oil to unprecedented heights. We are talking about 180 dollars a barrel, a level that would cause a violent economic and social crisis.
Hence the idea of this ceiling. The Italian Mario Draghi believes that it could dry up one of the major causes of inflation. The discussions will continue on June 27 with the participation of India, which became the second largest customer of Russian oil in May.
Some G7 countries are pushing for new investments in fossil fuels to be recognized as necessary.
Sanctioning Russian oil and at the same time preserving the fight against global warming is the other mission impossible in the energy puzzle. Several countries have already opted for economy rather than ecology with increased use of coal. Like Germany, Austria and the Netherlands.
The French government plans to reactivate the Saint-Avold coal-fired power plant; however, it has been closed since March as part of the energy transition. The question of a relaxation of the 2030 climate objectives will also be at the heart of the meetings of European environment ministers scheduled for June 28.
How are economic circles reacting?
In the United States, of course, there is intense lobbying in favor of fossil fuels. With the faithful support of the Republicans. As with abortion, there is reason to fear a backsliding on climate ambitions, under pressure from the most conservative, hostile to environmental regulations.
But there is also another pro-climate discourse that is being heard at the global level. In an open letter addressed to the G7, 400 leaders of large companies, both banks and majors, such as Shell, urge governments to step up action in favor of the climate. They require clarity and stability to achieve carbon neutrality goals. They are calling for a carbon price to be set as soon as possible.
The bosses of EDF, TotalEnergies and Engie in favor of sobriety
According to them, energy consumption must be reduced now. Act this summer to better tackle winter. Germany and Spain have already implemented consumption restriction measures. This is not yet the case in France. This energy crisis is colliding with the climate crisis.
In fact, the two come together and impose a rapid change of model passing through the end of fossil combustion. But the rulers have their eyes above all riveted on the economic indicators, on this inflation which causes poverty and anger throughout the world.
► IN BRIEF
According to the Bloomberg agency, Russia has defaulted on its foreign debt for the first time in more than a century.
Because she missed the deadline for this Sunday. The $100 million interest payment was due May 27. Russia claims to have paid this amount, which should have been redistributed within 30 days to creditors. The money did not arrive, so the defect is proven. A farce, according to the Russian finance minister, since his country has the foreign currency available, but cannot disburse it through the usual channels due to sanctions.