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G7 and EU Agree on Russian Oil Price Cap

6 December 2022 03:39

Australia, Britain, Canada, Japan the United States or the G7 alongside the 27-nation European Union agreed on Friday to cap what they would pay for Russian oil at USD 60 per barrel.

The price cap is set to take effect on Monday along with an EU embargo on Russian oil shipped by sea. Under the agreements, insurance companies and other firms needed to ship oil would only be able to deal with Russian crude if the oil is priced at or below the cap. Most insurers are located in the EU and the united kingdom and could be required to observe the ceiling.

The price cap aims to put an economic squeeze on Russia and further crimp its ability to finance its war on Ukraine. In response, the Russian embassy in Washington insisted that Russian oil will continue to be in demand and criticized the price limit as reshaping the basic principles of the functioning of free markets.

A post on the embassy’s telegram channel predicted the per-barrel cap would lead to a widespread increase in uncertainty and higher costs for consumers of raw materials.