G7 $60/bbl Russian Oil Cap Kicks in Monday

The G7 price cap of $60/bbl for Russian oil takes effect from today as the group tries to limit Kremlin oil revenues.

• The G7 nations and Australia agreed the cap on Friday after protracted negotiations within the EU that were largely held back by protests from Poland that the cap was too lenient. The move by Poland plus Baltic nations dragged the cap from $65-70/bbl to $60/bbl in just over a week, as well forcing regular cap reviews.
• Ukraine’s Zelensky has referred to the cap as “weak” having also pushed for much stricter levels from G7 nations.
• In response, Russia’s Novak said "We are working on mechanisms to prohibit the use of a price cap instrument, regardless of what level is set, because such interference could further destabilise the market," adding "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," he said.
• Russia’s key oil buyers China, India and Turkey have not said they will actively abide by western sanctions but in doing so would gain access to western shipping and insurance services.
• The cap on crude will be followed by a similar measure affecting Russian petroleum products that will come into force on February 5, although the level of that cap has still to be decided.