Western governments are aiming to cap the price of Russia's oil exports in an attempt to limit the fossil fuel earnings that support Moscow's budget, its military and the invasion of Ukraine.
The cap is set to take effect on Dec. 5, the same day the European Union will impose a— its crude that is shipped by sea. The EU was still negotiating what the price ceiling should be.
that oil prices would spike, Western economies would suffer, and Russia would see increased earnings from whatever oil it can ship in defiance of the embargo.rerouted much of its supply to India, China and other Asian countriesOne purpose of the cap is to provide a legal framework “to allow the flow of Russian oil to continue and to reduce the windfall revenue for Russia at the same time,” said Claudio Galimberti, a senior vice president of analysis at Rystad Energy.
, with Moscow believed to require around $60 to $70 per barrel to do that, its so-called “fiscal break-even.” “China and India get Russia's crude at a huge discount to Brent, therefore, they don't necessarily need a price cap to continue to enjoy a discount,” he said. “By complying with the cap set by the G-7, they risk alienating Russia. As a result, we do believe that the compliance with the price cap would not be high.”
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