Moscow flatly rejected the $60 oil price cap that was agreed to by the EU, G7, and Australia to cripple its economy in the wake of the Ukraine War. The Kremlin on Saturday said that it “will not accept” the move and is “analyzing” the action for a response.
The cap, which was heavily endorsed by Kyiv, goes into effect this week in conjunction with a new EU embargo on Russian crude oil arriving on the continent by ships.
The embargo will prevent shipments of Russian crude by tanker vessel to the EU, which account for two thirds of imports, potentially depriving Russia's war chest of billions of euros. https://t.co/x49IV3lhFa
— The Japan Times (@japantimes) December 3, 2022
The maritime embargo will deprive the EU of two-thirds of its oil imports from Russia and likely strip billions of euros from Russian President Vladimir Putin’s coffers.
Ukraine’s government celebrated the move, saying that it will “achieve our goal and the economy of Russia will be destroyed.” President Volodymyr Zelenskyy’s chief of staff Andriy Yermak said Saturday that it will force the invaders to “be responsible for all their crimes.”
The new stand by Western powers will be met by Russia’s refusal to supply oil to nations that accept the move. Moscow’s ambassador to international organizations in Vienna, Mikhail Ulyanov, posted on social media Saturday that “starting from this year Europe will live without Russian oil.”
The measures are also designed to target nations that are not part of the EU or G7.
These countries may continue to import seaborne Russian crude, but EU companies that handle shipping and insurance duties will be prohibited from providing their services unless the crude is sold for less than $60 per barrel.
President Joe Biden’s White House called the measure “welcome news” and expressed hope that it will thwart funding for the Kremlin’s “war machine.”
Treasury Secretary Janet Yellen said in a statement that she believed the move will benefit financially stricken nations. This, of course, is dependent on Moscow agreeing to sell oil within the EU and G7’s cap. That is anything but certain.
As for Russia, its U.S. embassy declared the move to be “dangerous” and said its energy sector will continue to find international buyers. Posting on Telegram, the embassy said that the moves are “flirtations with the dangerous and illegitimate instrument,” but demand for oil will continue.
A far more positive scenario would be for the U.S. to aggressively support its domestic energy production and step in as a viable alternative for Europe’s and other allies’ needs.
True energy independence would make foreign policy and energy demands irrelevant to each other. At the same time, it would create a powerful position from which to pursue vital American interests across the globe.