Amid Moscow's ongoing war against Ukraine, the G7 group of nations and its allies have officially approved a $60 per barrel price cap on Russian oil prices, saying it would come into force on December 5 or "very soon thereafter".
In a joint statement released early Saturday morning, the G7 and Australia said the decision to impose the price cap, which is meant to affect oil exports worldwide, was taken to "prevent Russia from profiting from its war of aggression against Ukraine", the BBC reported.
It said the move aims to "support stability in global energy markets and to minimise negative economic spillovers of Russia's war of aggression, especially on low-and middle-income countries, who have felt the impacts of Putin's war disproportionately".
Countries that sign up to the G7-led policy will only be permitted to purchase oil and petroleum products transported via sea that are sold at or below the price cap.
The development comes after the European Union (EU) had agreed on the price cap after persuading Poland to back it.
The plan, which stops countries paying more than $60 a barrel, needed the agreement of all EU states.
Poland announced its support on Friday after being reassured the cap would be kept at 5 per cent lower than the market rate.
When a price cap of $65-70 was initially put forward by the G7 nations in September, it was rejected by Poland, Lithuania and Estonia as too high, reports the BBC.
The price cap approval comes just days before an EU-wide ban on Russian crude oil imported by sea comes into force, also on December 5.
Meanwhile, White House National Security Council spokesman John Kirby has welcomed the price cap agreement, saying it would slow Russian President Vladimir Putin's "war machine".
Russia has however, denounced the scheme, saying it would not supply those countries which have enforced the price cap.
Before the war, in 2021, more than half of Russia's oil exports went to Europe, with Germany being the largest importer, followed by the Netherlands and Poland, according to the International Energy Association.
But since the war, EU countries have been desperately trying to decrease their dependency, said the BBC.
The US has already banned Russian crude oil, while the UK plans to phase it out by the end of the year.