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G7 to hike sanctions on Russia, nears oil price cap deal

g7 leaders summit
Germany's Chancellor Olaf Scholz, U.S. President Joe Biden, Britain's Prime Minister Boris Johnson, Japan's Prime Minister Fumio Kishida, European Commission President Ursula von der Leyen, European Council President Charles Michel, Italy's Prime Minister Mario Draghi, Canada's Prime Minister Justin Trudeau and France's President Emmanuel Macron during their working session at Elmau Castle, Germany June 27, 2022. Tobias Schwarz/Pool via REUTERS

The Group of Seven rich democracies will commit on Tuesday to a new package of coordinated actions meant to raise pressure on Russia over its war in Ukraine, and will finalize plans for a price cap on Russian oil, a senior U.S. official said on Monday.

The announcement came amid news that Russia looked set to plunge into its first sovereign default in decades and Ukrainian President Volodymyr Zelenskiy spoke to address G7 leaders meeting at an alpine resort in southern Germany.

“The dual objectives of G7 leaders have been to take direct aim at (Russian President Vladimir) Putin’s revenues, particularly through energy, but also to minimize the spillovers and the impact on the G7 economies and the rest of the world,” the U.S. official said on the sidelines of the annual G7 summit.

G7 nations, which account for nearly half the world’s economic output, are determined to crank up the pressure on Russia without stoking already soaring inflation that is particularly hurting the global south. The price cap could hit the Kremlin’s war chest while actually lowering energy prices.

G7 leaders will also make an “unprecedented, long-term security commitment to providing Ukraine with financial, humanitarian, military and diplomatic support as long as it takes”, including the timely provision of advanced weapons, the White House said in a fact sheet.

Western sanctions have hit Russia’s economy hard and the new measures are aimed at further depriving the Kremlin of oil revenues. G7 countries will work with others – including India – to limit the revenues that Putin can continue to generate, according to the U.S. official.

This morning’s news around the finding of Russia’s default, for the first time in more than a century, situates just how strong the actions are that the U.S., along with allies and partners, have taken, as well as how dramatic the impact has been on Russia’s economy,” the official added.

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