Countries agreeing to the price cap face the risk of losing crude oil from Russia, the world’s no. 2 oil producer|World Bank Photo Collection|CC BY-NC-ND 2.0
In an attempt to reduce Putin’s war chest, the Group of Seven (G7) nations and Australia placed a $60 per barrel price cap on Russian oil this Friday.
They also agreed to deny oil cargo insurance to their tankers supplying Russian oil to countries that don’t follow the price cap.
The ban and price cap are for Russian crude oil exported through the sea. It will take effect on December 5, the same day as European Union (EU) countries’ embargo on Kremlin’s seaborne oil will go into effect.
How this affects us?
Countries agreeing to this price cap face the risk of losing crude oil from Russia—the world’s no. 2 producer. This will affect gas prices, inflation, hike up the cost of living and increase energy crises around the world.
But G7 and EU feel otherwise
The move aims to “support stability in global energy markets and to minimise negative economic spillovers of Russia’s war of aggression, especially on low-and middle-income countries, who have felt the impacts of Putin’s war disproportionately,” said G7 in a joint coalition statement.