Oil prices: G7 mulls Russian oil price cap and gold import ban
Commodities were volatile on Monday after the leaders of Group of Seven (G7) countries discussed plans to cap the price of Russian oil and ban gold imports in a bid to put the squeeze on Moscow.
The move aims to curtail the Kremlin, which is benefiting from rocketing energy prices, cutting off its means of financing the invasion of Ukraine.
On Thursday, the United States said the world's wealthiest nations will soon announce a ban on gold imports.
"Together, the G7 will announce that we will ban the import of Russian gold, a major export that rakes in tens of billions of dollars for Russia," US president Joe Biden said as the leaders gathered in the Bavarian Alps.
Read more: Ukraine war: Russia earns $20bn from oil revenue in May
Oil prices were up in afternoon trade in London on Monday after falling sharply earlier. International benchmark brent (BZ=F) rose 0.5% to $113.63 (£92.64) a barrel, while West Texas crude (CL=F) rose 0.3% to $107.92 at the time of writing.
Spot gold (GC=F) jumped 0.4% $1,837.30 a troy ounce.
It comes as the International Energy Agency (IEA) said last month Russia continued to rake in oil revenues in May despite a global boycott from companies and most countries following its invasion of Ukraine.
According to the Paris-based group, Moscow's oil-export revenues surged to around $20bn last month, an 11% increase from the month before, despite shipping lower volumes.
This takes its total revenue for shipping oil and crude products roughly back to levels before the Ukraine crisis.
Read more: FTSE pushes higher as Russia nears historic foreign debt default
Last month, EU leaders agreed in principle to cut 90% of oil imports from the Kremlin by the end of 2022, sending oil prices sky rocketing and breach the psychological $124 barrier.
Shares in energy giants BP (BP.L) and rival Shell (SHEL.L) surged in early trade in London as oil prices eased after pushing higher. Shell was up 0.8%, while BP surged 0.6% to 398.15p.
Russ Mould, Investment Director at AJ Bell, said: "Since 1970, the oil price has doubled year-on-year six times and on four of those occasions the US and UK have gone into recession within the next two years. Everyone is waiting nervously to see if 2021 makes it five out of six.
"Higher energy costs feed inflation, act as a tax on consumers and can pressure corporate margins too. Central banks may be wringing their hands as they admit they cannot do much about the inflation oil is spreading right now but governments can, by permitting and encouraging more oil drilling and the construction of more pipelines.
"A weaker oil price would presumably make it harder for Vladimir Putin to fund his war in Ukraine, as well, so increased oil supply could bring economic and geopolitical benefits (even if it would take time to effect)."
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The brief respite from higher oil prices was short-lived as Brent crude has headed back up above $113 dollars a barrel. The gain has lifted shares in energy giants BP and Shell in early trade.
"Despite the creep upwards in prices, oil is still on track for the first monthly loss in June since November. Worries in the background persist about a looming global downturn and falling demand for crude as a knock on effect of sharply tighter monetary policy, despite pledges to spend big on infrastructure.’"
