But the design of the cap is contentious and is unlikely to prevent countries such as India and China from buying Russian oil,although it could force Russia to offer a discount to its trading partners and therefore cut revenue for Putin and his government.
Australia already has a total ban on the import,purchase and transport of Russian oil,gas and coal under sanctions imposed after Putin ordered the invasion of Ukraine in February,suggesting its backing for the G7 price cap would have little impact on the market.
But the move offers support for Ukraine after Deputy Prime MinisterRichard Marles signalled on Sunday he wanted to continue military aid for the country’s fight against the Russian army.
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With sanctions on Russia likely to be a key issue for G20 nations at a leadership summit in Bali in November,the Australian decision adds to momentum for the oil price cap in the hope of getting other countries to join the effort.
The European Union and the United Kingdom have decided to ban their insurers from covering Russian oil shipments,making it too risky and expensive for shipping companies to transport the oil and raising concerns about global shortages and price hikes.
The G7 nations – the US,Britain,Japan,Italy,Germany,France and Canada – agreed earlier this month to an additional mechanism to exempt insurers from the ban when the price of the oil is below the proposed cap,seeing this as a way to keep the price low while still punishing Russia.