Veriton Investment

US Proposes Broad G-7 Sanctions on Russian Energy to End War

(Bloomberg) -- The US will urge its allies in the Group of Seven to impose tariffs as high as 100% on China and India for their purchases of Russian oil in an effort to convince President Vladimir Putin to end his war in Ukraine.

Most Read from Bloomberg

New York City’s Transit Woes Worsen With Aging Subway Fleet

NYC Ferry Sees Record Ridership as System Eyes New Routes

NY’s LIRR Plans to Run Free Bus Service If Workers Strike

Santa Monica Declares Fiscal Distress Amid Abuse Settlements

Yesterday’s Schools of Tomorrow Face the Future

The US will also tell the G-7 countries they should create a legal pathway to seize immobilized sovereign Russian assets and consider seizing or using the principle of those assets to fund Ukraine’s defense, according to a US proposal seen by Bloomberg. The vast majority of the about $300 billion of Moscow’s immobilized assets are in Europe.

Separately, senior US officials have floated with European counterparts the idea of gradually seizing those frozen Russia assets to increase the pressure on Moscow to enter into negotiations, according to people familiar with the matter who spoke on the condition of anonymity.

Profits generated by the assets are currently being used to provide loans to Ukraine.

Brent crude futures extended gains following the report, briefly touching a session high. The euro fell to the day’s low and last traded around the $1.1703 mark early in the New York session.

A spokesperson from the White House didn’t immediately respond to a request for comment on the proposals.

Canada, which holds the presidency of the G-7, convened a meeting of the group’s finance ministers on Friday to “discuss further measures to increase pressure on Russia and limit their war machinery,” according to a statement.

The US proposal calls for 50% to 100% secondary tariffs on China and India as well as restrictive trade measures on both imports and exports to curb the flow of Russian energy and to prevent the transfer of dual-use technologies into Russia, according to the proposal.

The proposal poses a challenge given that several nations in the EU, including Hungary, have blocked more stringent sanctions targeting Russia’s energy sector. Such measures would require the backing of all member states.

President Donald Trump has told European officials he’s willing to impose sweeping new tariffs on India and China to push Putin to the negotiating table with Ukraine — but only if nations in Europe do so as well.

Trump made the ask when he called into a meeting with senior US and European Union officials in Washington this week and said the US would be willing to mirror tariffs imposed by Europe on either country, Bloomberg reported earlier.

Speaking in an interview on Fox & Friends Friday, Trump said his patience with Putin is running out fast, adding that he could hit Russia “very hard” with sanctions related to oil.

Trump’s suggestion comes after his deadline for Putin to hold a bilateral meeting with Ukraine’s Volodymyr Zelenskiy passed without indication that the Russian leader was genuinely interested in engaging in face-to-face peace talks. Instead, Moscow has stepped up its Ukraine bombing campaign.

The proposal to the G-7 also seeks sanctions targeting Russia’s so-called shadow fleet of oil tankers and the networks that enable the trades to flow; the Russian oil company Rosneft PJSC; and a prohibition of insurance for maritime services.

The US will also call on its allies to sanction entities supporting Russia’s military industry; Russian regional banks; prohibit services related to artificial intelligence and financial technology in Russian Special Economic Zones, according to the proposals.

Trump has so far refrained from imposing direct sanctions on Russia, despite skating through several self-imposed deadlines and Putin’s continued reluctance to negotiate an end to the war. Trump has, however, doubled tariffs on India to 50% over its continued purchase of Russian oil.

--With assistance from Josh Wingrove, Laura Dhillon Kane, Alex Longley and Hadriana Lowenkron.

(Updates with market reaction in the fifth paragraph.)