US: Price limit on Russian oil would affect Putin

• According to the US, a new ceiling on the price of Russian oil will “directly cut into Putin’s most vital source of income.”
• The restriction prohibits nations from paying more than $60 (£48) per barrel for Russian crude oil exported over sea.
• The cap will especially help low- and middle-income nations that have been negatively hit by increasing energy and food prices, according to Ms. Yellen.

According to the US, a new ceiling on the price of Russian oil will “directly cut into Putin’s most vital source of income.”

The cap, which was formally adopted by Western partners on Friday, according to US Treasury Secretary Janet Yellen, was the result of months of laborious work.

The restriction prohibits nations from paying more than $60 (£48) per barrel for Russian crude oil exported over sea.

It is scheduled to take effect on December 5 or shortly thereafter.

The cap will especially help low- and middle-income nations who have been negatively impacted by increasing energy and food prices, according to Ms. Yellen.

Additionally, she claimed that it will “restrict the profits he’s using to pay his savage invasion” and further restrain Russian President Vladimir Putin’s financial situation.

The price cap “would immediately cut into Putin’s most important source of income with Russia’s economy already declining and its budget more stretched thin,” she said in a statement.

Allies and the G7 agree to a ceiling on the price of Russian oil.
How is the world going to survive without Russian gas and oil?
The G7 countries—the US, Canada, the UK, France, Germany, Italy, Japan, and the EU—proposed the price ceiling in September in an effort to limit Moscow’s ability to fund the conflict in Ukraine.

On Friday, the European Union passed the price ceiling after persuading Poland to support it. The price cap required the support of all of its member states.

Poland declared its support after receiving assurances that the cap would be maintained at a rate that was 5% below the market rate.

According to rumours, the EU sought to set the maximum at $65-70, but Poland, Lithuania, and Estonia reportedly thought this was too high and rejected it.

Warsaw held out in order to explore an adjustment mechanism that would keep the cap below the market rate as the price of oil changed because it wanted the value to be as low as feasible.

The G7, the EU, and Australia stated in a joint statement that the price cap decision was made to “prevent Russia from benefitting from its campaign of aggression against Ukraine.”

The UK will not change its position, according to British Chancellor Jeremy Hunt, and will keep looking for new approaches to “tight down on Putin’s financing lines.”

The price cap deal was reached just a few days before the EU-wide embargo on the import of Russian crude oil by sea, which takes effect on December 5th.

The price cap is designed to work in conjunction with that and influence oil exports globally.

Only oil and petroleum products that are sold at prices equal to or less than the price cap may be purchased by nations that agree to the G7-led policy.

Tankers carrying Russian oil to nations that disregard the price cap will also be denied insurance, according to Ukraine’s supporters in the west. Russia will find it challenging to sell oil over that price as a result.

Russia criticised the plan and said it will stop supplying nations with price caps.

The head of the foreign affairs committee in Russia, Leonid Slutsky, told the Tass news agency that by imposing the cap, the EU was endangering its own energy security.

According to the International Energy Association, in 2021, more over half of Russia’s oil exports travelled to Europe. The Netherlands, Poland, and Germany were the top three importers.

Source: International Energy Agency

However, since the conflict, EU nations have been frantically working to reduce their reliance. While the UK intends to phase out Russian crude by the end of the year, the US has already prohibited it.

Russia will undoubtedly feel the effects of the sanctions, but the impact will be somewhat lessened by its decision to sell its oil to other markets, like India and China, who are now the two biggest consumers of Russian crude oil.

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