EU sets Russian oil cap at $60 a barrel

The European Union has agreed to cap Russian oil prices at $60 a barrel after days of negotiation, hoping to limit revenue for its war on Ukraine. The announcement from the G7 also bans all seaborne Russian oil imports starting on Monday, NPR reports.

The measures are to limit Russia's profits without cutting off supply altogether, explains The Associated Press. Russia has warned that these measures will drive up prices and further place stress on the energy market, however, analysts had said that the cap may actually not be low enough and may not impact the country much. "Up front, the cap is not a satisfying number," commented Simone Tagliapietra, an energy policy expert at the Bruegel think tank. She argued the measure could keep Russia from profiting if prices go up.

The cap will also apply outside the EU, essentially locking the price at $60 which is slightly lower than competitors. However, if the cargos come through a country not enforcing the cap, then the cap won't apply, the Times continues. Russia has also said that it will not observe the cap and will not deliver oil to countries that do, but it will still be "more costly, time-consuming and cumbersome" to avoid the restrictions, according to Maria Shagina from the International Institute for Strategic Studies in Berlin. The cap will also be reviewed regularly to maintain its level at least 5 percent below market value for Russian oil.

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"What policymakers are trying to do is cut the world's largest oil exporter out of the market to a large degree," explains Ben Cahill at the Center for Strategic and International Studies.