The International Energy Agency (IEA) does not expect moves by the Group of Seven nations to counter the evasion of price caps on Russian energy will change the supply situation for crude oil and oil products, the IEA’s Executive Director Fatih Birol said.
The G7, the European Union and Australia agreed to impose a $60-per-barrel price cap on Russian seaborne crude oil and also set an upper price limit for Russian oil products to deprive Moscow of revenues for its invasion of Ukraine.
The G7 will enhance efforts to counter evasion of the caps “while avoiding spillover effects and maintaining global energy supply,” the group said on Saturday, without giving details, during its annual leaders’ meeting.
The IEA, which provides analysis and input to the G7 on energy, does not see the enhanced enforcement of the price caps affecting the global oil and fuel supply, Birol told Reuters in an interview on the sidelines of the summit.
“Any significant changes in the markets as always we will reflect in our analysis, in our reports, but for the time being I don’t see a reason to make a change in our analysis,” he said.
According to Birol, the price cap reached two main objectives: it did not trigger tightness in the markets as Russian oil continued to flow but at the same time Moscow’s revenues were reduced.
“Russia did play the energy card, and it did fail. But there are some loopholes, some challenges for the better functioning of the oil price cap,” Birol said.
The G7 has also brought support for the gas investment back to the communique on Saturday in that it said was a ‘temporary’ solution to address potential market shortfalls and as nations are trying to de-couple from the Russian energy.
The move has alarmed climate activists who warned the group may fail to deliver on its goal to achieve net-zero carbon emissions by 2050 and limit global warming to 1.5 degrees Celsius (2.7 Fahrenheit).
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“It may have some impact but countries once again reiterated that if there are some impacts to slow down in that area, they are going to accelerate in the other areas that it will not change their determination of reaching the 1.5 degree Celsius goal,” Birol said.
“The clean energy transition is happening and much faster than many think.”
The language change was brought in by Germany, once a top buyer of Russian gas, sources have said, and the communique did not have a time frame for investments into the gas sector.
“There is no determination of any time frame there, but I think the main issue is because of the reliance of especially European countries on Russian gas almost for decades. Now it is not easy to change everything from one day to another,” Birol said.
“(German) Chancellor (Olaf) Scholz made clear again and again that Germany is very keen to reach this 1.5 degrees target. And I believe in his words.”