Emmanuel Macron wants to see an increase in oil production around the world as the French president seeks ways to reduce the cost of energy and ease the pressure felt by energy-importing economies.
Macron made the proposal to his fellow G7 leaders as they seek to hammer out the details of a Russian oil price cap that aims to drive down costs and blunt soaring inflation.
The French president said the price cap should apply to all producers around the world, not just Russia, but did not specify how it would work, according to officials familiar with the talks.
A French official later said the idea was “not a global price cap”, but a way to moderate prices via higher oil production. In particular, France wants to explore ways to put production from Venezuela and Iran back on the market, both subject to American sanctions.
US President Joe Biden has previously courted the authoritarian regime of Nicolás Maduro in Venezuela in an attempt to cool the oil market.
France’s intervention underlines the deep concern of the G7 leaders about the balance sheet of their economies. They spent the summit at Schloss Elmau debating ways to cut energy costs, with the dialogue focusing on US push for a cap on the price of Russian oil.
Officials are still working out the details of the Russian crude price cap, which would be enforced via limits on the availability of European services, including insurance for Russian oil shipments.
Officials warn that the program is very complex and will require intensive technical work. He could face challenges in the EU where sanctions require the consent of all 27 member states.
G7 leaders are expected to announce that they “welcome” the idea in principle while acknowledging that there is still a lot of work to be done to make it a reality. They are likely to commission experts to formulate a concrete proposal.
“We support the basic structure,” a G7 official said of Russia’s oil price cap. “But the details need to be worked out.”
Another said all G7 states agreed with “the basic idea that we need to reduce Russian oil revenue streams”.
Macron’s calls for higher production came after OPEC and its allies agreed earlier this month to ramp up oil production in July and August. The United States has pressured the kingpin of the cartel, Saudi Arabia, to rein in rising crude prices as it weighs on the global economy.
Biden embarks on a trip to the Middle East in July, including a planned stopover in Saudi Arabia.
A G7 official has sounded a deeply skeptical note about the idea of a global price cap, warning it would destroy the incentive for producing countries to pump more oil to replace Russian crude being squeezed out of the market.
Three members of the G7 are also major oil producers. The United States is the world’s largest producer, pumping nearly 18 million bpd of raw and natural gas liquids; Canada is the fifth largest, pumping some 4.5 million b/d of crude; and the UK pumps over 900,000 bpd, second only to Norway among European members of the OECD.
Additional reporting by David Sheppard in London