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 the sea.
It is scheduled to take effect on December 5 or shortly thereafter.
The cap will especially help low- and middle-income nations that 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 for his savage invasion” and further restrain Russian President Vladimir Putin’s financial situation.
The G7 countries—the US, Canada, the UK, France, Germany, Italy, Japan, and the EU—proposed the price ceiling in September 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 rumors, 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 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 criticized 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 energy security.
