G7 Sanctions Oil and Gold to Hit at Russia

· Brings Key Allies including India in Support

· WTO Rules Violated

· The plan — which would allow Russia to keep selling oil to the world but would sharply limit the price.

· Moscow’s lucrative energy exports have not dented Russian oil revenues

· Economists forecast that it will shrink almost 10 percent this year. The ruble has fully recovered from sharp early losses.

· On Sunday, the G7 leaders said they were banning imports of Russian gold

· China, India and other countries that have not joined the G7 in opposing Russia’s invasion of Ukraine the ability to buy oil at a much lower price than America or much of Europe can.

Struggling to choke off the revenue that enables Russia to finance its invasion of Ukraine, and hoping to shield consumers at home from the war’s economic pain, leaders of the Group of 7 nations on Monday moved close to embracing an aggressive but untried plan to manipulate the price of oil, the largest commodity market in the world.

The plan — which would allow Russia to keep selling oil to the world but would sharply limit the price — is an acknowledgment that the embargoes the United States and allies swiftly imposed on Moscow’s lucrative energy exports have not dented Russian oil revenues. And they have driven up gasoline and other fuel prices, prompting consumer backlash in the United States and Europe.

At the same time, the broader economic sanctions the West put in place to try to cripple the Russian economy have so far fallen short, though economists forecast that it will shrink almost 10 percent this year. The ruble has fully recovered from sharp early losses.

Militarily on Monday, Moscow pushed forward with slow but steady gains in Ukraine’s east, imposing heavy casualties on Ukraine’s army, while also maintaining persistent shelling of cities both on the Black Sea coast and in the north near the Russian border.

On Sunday, the G7 leaders said they were banning imports of Russian gold, another sign that the West is looking for new ways to isolate Moscow from the world financial system.

The effort to put a price cap on Russia oil is the brainchild of Janet L. Yellen, President Biden’s Treasury secretary. The details are likely weeks or more away from being finalized, requiring intense negotiations by G7 finance ministers, private companies and leaders of countries in Latin America, Africa and elsewhere that buy Russian oil.

And there is no guarantee that the plan will come together quickly, or at all, or that it will succeed as the G7 leaders hope.

There is also a potential political downside in Europe and possibly the United States: To succeed, the plan will need to give China, India and other countries that have not joined the G7 in opposing Russia’s invasion of Ukraine the ability to buy oil at a much lower price than America or much of Europe can.

But American officials believe that the details of the plan could be worked out quickly, and that the plan could drive down both Russia’s revenues from oil and the price per barrel on global markets.

“I think it can be done relatively quickly,” Jake Sullivan, President Biden’s national security adviser, told reporters at the summit.

Ms. Yellen is an economist by training, and her idea rests on a sort of economist’s logic: that countries will seek to pay as little as possible for a crucial commodity like oil, no matter where their leaders stand on the Ukraine war.

It also rests on an idea that might seem jarring to anyone who watched Mr. Biden and allies take aim at Russian oil exports soon after its president, Vladimir V. Putin, launched the invasion of Ukraine. Instead of seeking to drive Russian oil off the world market, the price cap would try to keep Moscow’s oil exports flowing — but at a cut rate.

The United States has already banned Russian oil, and in coming months European allies will prohibit most Russian oil exports. The Europeans will also reduce their own gas imports from Russia by the end of the year. Any price caps would not interfere with these existing bans.

Despite the sanctions, Russia’s revenues from oil sales have been on the rise, a function of soaring fuel prices, while consumers around the world have faced mounting pain at the gasoline pump.