Russia-Ukraine war: G7 price cap on Russian oil kicks in

Moscow says it will not abide by the price cap even if it has to cut oil production.

The price cap on Russian seaborne oil agreed upon by the European Union, the G7 and Australia has come into force.

The cap of $60 per barrel, which took effect on Monday, is aimed at limiting Russia’s ability to finance its war in Ukraine while making sure it keeps supplying the global market.

Moscow, however, has said it will not abide by the measure even if it has to cut production.

The cap comes on top of the EU’s embargo on imports of Russian crude by sea and similar pledges by the United States, Canada, Japan and the United Kingdom.

It means Russian oil sold only at a price equal to or less than $60 per barrel can be shipped to third-party countries using G7 and EU tankers, insurance companies and credit institutions. Because the world’s key shipping and insurance firms are based in G7 countries, the cap could make it difficult for Moscow to sell its oil for a higher price.

Countries that do not adopt the measure can continue to buy Russian oil above the price cap, but without using Western services to acquire, insure or transport it.

But Russia, the world’s second-largest oil exporter, said on Sunday it would not accept the cap and would not sell oil that is subject to it.

Agencies