A limitation on the price of Russian oil, according to the United States, will limit Russia’s earnings for its “illegal conflict in Ukraine.”
The ban, which was accepted by Western allies on Friday, is intended to prevent countries from paying more than $60 (£48) per barrel of Russian crude oil transported by sea.
The move, which is set to take effect on Monday, increases Western pressure on Russia over the incursion.
Ukraine suggested that the cap established by the West be decreased. Russia stated that it would not supply countries that enforced the ban.
The price ceiling was proposed in September by the G7 group of industrialized nations (the United States, Canada, the United Kingdom, France, Germany, Italy, Japan, and the European Union) to limit Moscow’s capacity to finance the Ukraine conflict.
The G7, the European Union, and Australia stated in a joint statement that the decision was made to “prevent Russia from benefitting from its aggression against Ukraine.”
US Treasury Secretary Janet Yellen stated that the price ceiling will further constrain Russian President Vladimir Putin’s finances and “limit the income he’s using to support his murderous invasion” while avoiding supply disruptions that may cause global gasoline prices to skyrocket.
She stated in a statement, “With Russia’s economy already declining and its budget becoming increasingly strained, the price cap will immediately reduce Putin’s most vital source of money.”
Russian news outlets said that Kremlin spokesman Dmitry Peskov that Russia would “not accept” the price cap and was analyzing the action.
Jeremy Hunt, the Chancellor of the United Kingdom, stated that the country will not waiver in its support for Ukraine and would continue to seek out new ways to “choke off Putin’s funding lines.
The agreement on a price ceiling comes just days before an EU-wide ban on the importation of Russian crude oil by sea takes effect on 5 December.
The price ceiling, which is intended to affect global oil exports, is intended to complement this.
Countries adhering to the G7-led policy may only purchase oil and petroleum products carried by the sea at or below the price ceiling.
In addition, Ukraine’s Western allies intend to restrict insurance coverage to tankers transporting Russian oil to nations that do not adhere to the price cap. This will impede Russia’s ability to sell oil over that price.
Senior Russian politician Leonid Slutsky told the Tass news agency that with the cap, the EU was jeopardizing its energy security.
Russia will undoubtedly feel the effects of the sanctions, but the damage will be mitigated by its decision to sell oil to other markets, such as India and China, which are currently the top purchasers of Russian crude oil.
According to the International Energy Association, more than half of Russia’s oil exports went to Europe in 2021, before the war. The greatest importer was Germany, followed by the Netherlands and Poland.
However, since the conflict, EU nations have made frantic efforts to reduce their dependence. The United States has already banned Russian crude oil, while the United Kingdom wants to eliminate it by the end of the year.
