Shell says Russian oil price cap needs broad participation to work

A proposed price cap on Russian oil exports will only work if countries beyond Europe and the United States join the scheme, Shell Chief Executive Ben van Beurden said.

The G7 group of countries agreed on Tuesday to impose a ban on transporting Russian oil sold above a certain price in a bid to deplete Moscow's war chest. China and India, which are not in the G7, are the largest importers of Russian crude.

"Price caps will only work if you have a very large participation in the price cap system," van Beurden told reporters.

"If you have only, shall we say, countries in Europe and the United States and a few others agreeing to or imposing a price cap then you will continue to see what is currently happening, which is, Russian crude will go to countries who are perfectly okay to still purchase Urals for instance," he said, referring to the Russian Urals crude grade.

The proposal discussed by G7 included implementing the price cap through insurance companies, which would mean cargoes that did not meet the requirement would not be insured.

"I'm not entirely sure whether that will work and who gets punished - whether it’s the insurance companies or somebody else," van Beurden said. "I'm not saying that it can’t work but I think it would be premature to draw a conclusion."