Russia rejects $60 oil price cap set by EU, G7

Sunday, Dec 04, 2022

KYIV, Ukraine: Russia on Saturday rejected a $60 price cap on its oil agreed by the EU, G7 and Australia, which Ukraine said would contribute to the destruction of Russia’s economy.

“We will not accept this price cap,” Kremlin spokesman Dmitry Peskov told domestic news agencies, adding that Russia, the world’s second-largest crude exporter, was “analysing” the move.

The $60 oil price cap will come into effect on Monday or soon after, alongside an EU embargo on maritime deliveries of Russian crude oil. The embargo will prevent seaborne shipments of Russian crude to the European Union, which account for two-thirds of the bloc’s oil imports, potentially depriving Russia’s war chest of billions of euros.

Kyiv welcomed the price cap, which stops countries from paying more than $60 a barrel for Russian oil deliveries by tanker vessel and is designed to make it harder for Russia to bypas

The market price of a barrel of Russian Urals crude is currently around $65 dollars, just slightly higher than the $60 cap, indicating the measure may have only a limited impact in the short term.

Russia has earned 67 billion euros ($71 billion) from the sale of oil to the European Union since the start of the war in February. Its annual military budget amounts to around 60 billion, noted Phuc-Vinh Nguyen, an energy expert at the Institut Jacques-Delors in Paris.