The price of Russian oil agreed with the European Union, G7 and Australia has come into effect.
The price of $ 60 per barrel, which came into effect on Monday, is intended to reduce the ability of Russia in its war in Ukraine and ensure that it supplies the international market.
Moscow, however, has said it will not comply with the measure even if it has to cut production.
The cap comes on top of EU restrictions on Russian exports by sea and similar pledges by the United States, Canada, Japan and the United Kingdom.
It means that Russian oil that is sold only at a price equal to or less than $ 60 per barrel can be exported to third countries using G7 and EU tanks, insurance companies and credit unions. Because the largest shipping and insurance companies in the world are located in the G7 countries, the cap may be difficult for Moscow to sell its oil at a higher price.
Countries that do not comply with the measure can continue to buy Russian oil at above cost, but not use Western services to find, verify or transport it.
“We have clear information that a number of developing countries, especially in Asia, will follow the policy that is about to expire,” a European official told AFP, adding that Russia has already been “pressured” by its customers to offer discounts.
But Russia, the world’s second-largest oil exporter, said on Sunday it would not accept the cap and would not sell the oil it holds.
Deputy Prime Minister Alexander Novak said the move by the West was a serious interference that contradicted the rules of free trade and could disrupt energy markets around the world by causing shortages.
“We are working to prevent the use of a valuable tool, regardless of the level that is set, because such interference can disrupt the market,” he said.
“We will sell oil and petroleum products to countries that will work with us under the market, even if we reduce production a little,” he said.
Oil and gas sales to Europe have been one of Russia’s biggest sources of foreign currency since Soviet geologists discovered oil and gas in the Siberian marshes in the decades after World War II.
The price of the G7 oil, which was agreed on Friday, is not below the level of $ 67 when the barrel of Russian oil was closed at the end of the day. Therefore, the EU and G7 countries hope that Russia will still have an incentive to continue selling oil at that price and receive a small profit.
“Russia must remain interested in selling its oil” or risk reducing global supply and causing prices to rise, a European official told AFP, saying he did not believe the Kremlin’s threat to stop exports to countries following the cap.
The official said that Russia will remain concerned about maintaining the condition of its equipment, which could be damaged if stopped, and maintaining the confidence of its customers, including China and India.
While Russia may be tempted to build, operate and insure its own ships, Brussels believes that “building a naval infrastructure overnight is very difficult” – and this may prove difficult to attract customers.
The level of the cap must be reviewed by the EU and the G7 every two months, with the first such review due in mid-January.
“The evaluation must take into account … the effectiveness of the measure, its implementation, compliance and international coordination, the impact it may have on the members of the alliance and partners, and the development of the market,” the European Commission said in a statement.
The crude cap will be followed by a similar measure affecting Russian oil that will come into force on February 5, although the level of the cap is still to be decided.