The United States and its allies in Europe have spent the last 10 months turning the screws on the Russian economy in retaliation for Vladimir Putin’s war on Ukraine. The Western coalition blocked Russia from accessing around half of its more than $600 billion in foreign reserves, disconnected multiple Russian banks from the global financial system, diversified away from Russian natural gas and banned the import of Russian coal.
Now, Russian crude oil is being targeted. For the foreseeable future, the European Union, still the biggest buyer of Russian oil, will cease looking to Moscow as a source for the fuel. On Friday, Dec. 2, the G-7 (consisting of the U.S., the U.K., Canada, Japan, the EU, France, Germany and Italy) finalized a novel plan that aims to limit the revenue Russia receives from oil sales around the world to $60 dollars a barrel, essentially stripping Moscow of the power to dictate prices.
Maritime financial services and insurers in the EU and U.K. will no longer provide coverage for vessels carrying Russian oil unless the oil is sold at or below the cap. U.S. Treasury Secretary Janet Yellen is confident the mechanism will work, writing that “the price cap will immediately cut into Putin’s most important source of revenue.”
