As the West attempts to restrict Moscow’s capacity to finance its conflict in Ukraine, a Group of Seven (G7) price cap on Russian seaborne oil went into effect on Monday. However, Russia has stated that it will not comply with the measure even if it means reducing production.
Friday saw the G7 countries and Australia agree on a $60 per barrel price cap on Russian crude oil after overcoming Poland’s resistance. Poland wanted it significantly lower. The second-largest oil exporter in the world is Russia.
Alexander Novak, the deputy prime minister of Russia, described it as a blatant meddling that went against free trade principles and further unstable the market.
“We will sell oil and petroleum products only to those countries that will work with us under market conditions, even if we have to reduce production a little,” Novak, the Russian government official in charge of its oil, gas, atomic energy and coal, said on Sunday.
Only if the cargo is purchased at or below the $60 per barrel maximum is it possible to transfer Russian oil to third-party nations utilising G7 and EU ships, insurance firms, and financial institutions.
Industry participants and a U.S. official stated in October that Russia can access enough tankers to export the majority of its oil beyond the cap, highlighting the limitations of the most ambitious effort yet to curb Russia’s wartime income.
According to Ukrainian President Volodymyr Zelenskiy, $60 is too expensive to prevent Russia from waging war in Ukraine. Setting a cap on Russian prices that is so convenient for a terrorist state’s budget cannot be characterised as a serious choice.
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Since Russia’s invasion of Ukraine on February 24, the United States and its allies have put Russia under severe sanctions and provided Ukraine with billions of dollars’ worth of military assistance.
But at the weekend, French President Emmanuel Macron attracted fire from Ukraine and its allies in the Baltic for proposing that the West should take into account Russia’s demand for security guarantees if it agrees to peace negotiations.
According to Zelenskiy’s assistant Mykhailo Podolyak, Russia should provide security guarantees to the globe rather than the other way around.
German Chancellor Olaf Scholz on Monday warned against starting a new Cold War by dividing the world into blocs as a further indication of Western anxiety about a standoff that has caused energy and refugee problems in Europe.
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