17:36 17 May 2022

The United States will propose G7 to impose tariffs on russian oil as a quick alternative to embargo

Photo: Getty Images

Representatives of the US Treasury Department at a meeting of G7 finance ministers will propose that the EU introduce tariffs on russian oil as a faster alternative to a direct oil embargo.

Reuters reports.

The tariff mechanism, which will be proposed by US officials, will be designed to keep russian oil on the market, but limit the amount of revenue that can come to Moscow from exports, the US Treasury Department argues.

As russian oil is already sold at a discount to world benchmarks, tariffs could be set at a level that would partially take into account this gap and reduce russia's oil profits. At the same time, they say, tariffs should allow russia to cover production so that the country has an incentive to continue exports.

Officials say many countries have a "strong desire to stop buying russian oil as soon as possible," but a direct EU embargo could significantly raise oil prices. This, in turn, may offset the impact of the embargo on russian revenues, even if supplies are reduced.

Funds from such duties could be channeled to Ukraine's Renovation and Reconstruction Fund, thus forcing russia to pay for the destruction it has brought to Ukraine.


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