France calls for 'oil supplies diversification' including from Iran

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France on Monday urged oil-producing nations to boost their output in an "exceptional manner", to help bring down soaring crude prices fuelled by the war in Ukraine.

"We need producing countries to produce in an exceptional measure," said the French presidency on the sidelines of the G7 summit in the Bavarian Alps.

The presidency also called for a "diversification of supplies", including from Iran and Venezuela.

G7 closing in on Russian oil price caps

In the same context, the United States said that the G7 is closing in on a plan to force a lower price for Russian oil to pressure Russia over the war in Ukraine.

"There is also consensus emerging... that the price cap is a serious method to achieve that outcome," US President Joe Biden's national security advisor, Jake Sullivan, told reporters at the G7 summit in Germany.

A senior US official described talks within the G7 - Britain, Canada, France, Germany, Italy, Japan and the US - as advancing.

"We're still in final discussions with other G7 counterparts working to finalise this, but we're very close to a place where G7 leaders will have decided to urgently direct relevant ministers to develop mechanisms to set a global price cap for Russian oil," the official said, speaking on condition of anonymity.

According to the official, the goal of the plan is to starve the Kremlin of its "main source of cash and force down the price of Russian oil."

Immensely complex logistical & technical aspects

While the West has already imposed multiple layers of anti-Russian sanctions in response to the war in Ukraine, the targeting of the oil industry represents the highest economic stakes so far.

Energy exports are Russia's biggest revenue earner, while Western countries are among those most heavily dependent on imported oil and gas.

According to Sullivan, the main obstacle to the idea is not so much willingness to go ahead but sorting out the immensely complex logistical and technical aspects.

"It is a new kind of concept to deal with a particularly novel challenge, which is how to effectively deal with a country that's selling millions of barrels of oil a day and (to) try to deprive it of some of the revenues," Sullivan explained.

Minimise the spillovers

With soaring fuel prices at the heart of painfully high inflation in the US and other G7 countries, leaders want to be sure that any oil price cap would also "minimise the spillovers and the impact on the G7 economies and the rest of the world," the senior US official said.

The idea of price capping Russian oil and gas has support from Italy and France.

The French presidency has however said the measure would be "much more powerful if it came from the producing countries," and that it was necessary to work with OPEC+ and other oil producers around the world.

The United States and Canada, which are far less reliant on Russia as an energy supplier, have banned all Russian oil imports. Europe is seeking to lessen its own reliance.