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The cap on the price of Russian oil came into force to reduce the income that Putin uses in the invasion of Ukraine

Oil tanks at Transneft's Volodarskaya LPDS production facility in the town of Konstantinovo in the Moscow region (Reuters)
Oil tanks at Transneft’s Volodarskaya LPDS production facility in the town of Konstantinovo in the Moscow region (Reuters)

Western countries began to impose on Monday a price limit of 60 dollars a barrel to Russian crude and vetoed some varieties, within the new measures to increase pressure on Moscow for his war in the Ukraine.

The European Union, Australia, the United Kingdom, Canada, Japan and the United States agreed on the price cap on Friday. The decision has been rejected by the Kremlin and criticized by Ukraine’s President Volodimir Zelensky, whose government wanted to cut the price in half.

The 27-nation European bloc has also placed an embargo on Russian crude shipped by sea.

There was doubts about how the measures would affect market prices. Benchmark US crude rose 90 cents to $80.88 on Monday.

Many other factors, such as the measures against COVID-19 in China, which has affected its manufacturing industry, also had an impact on the demand for crude oil and therefore on prices. Oil is down a lot from the peak it reached at the start of the war.

Russia’s Deputy Prime Minister Alexander Novak, head of energy affairs, warned in televised remarks on Sunday that Russia will not sell its oil to countries that try to use the price cap.

“We will only sell oil and oil products to countries that work with us on market terms, even if we have to cut production to some extent,” Novak said in televised remarks hours before the measure took effect.

The Kremlin also said the cap would have no impact on Moscow’s offensive in Ukraine. “The economy of the Russian Federation has all the necessary capabilities to fully respond to the needs and requirements of the special military operation. These measures will have no impact,” Kremlin spokesman Dmitri Peskov told reporters.

The Ukrainian government demanded over the weekend that the limit be lowered to 30 dollars per barrel and insisted that at $60, Russia would still bring in $100 billion a year worth of crude oil, money that can be used to finance its war machine.

Ukraine's President Volodimir Zelensky calls for a stronger cut on Russian oil
Ukraine’s President Volodimir Zelensky calls for a stronger cut on Russian oil

Russia, the second largest crude oil producer in the worldrelies on oil and gas sales to sustain its economy, already choked by sweeping international sanctions due to President Vladimir Putin’s war in Ukraine.

For its part, China assured that the energy relationship between the Asian giant and Russia is based on “mutual respect and benefit” after the sanctions imposed by the European Union and the G7 on the price of a barrel of crude oil from the Slavic country.

“China and Russia have always carried out energy cooperation in a spirit of mutual respect and mutual benefit,” Foreign Ministry spokeswoman Mao Ning said at a press conference, according to local press reports.

In recent weeks, Russia has attacked Ukrainian infrastructure, including power plants, and is continuing an offensive in the east, especially in and around the city of Bakhmut.

Russian forces have also gained a foothold near the southern city of Kherson, retaken by Ukrainian forces last month after eight months of occupation.

The war that began with Russia’s invasion of Ukraine on February 24 has displaced millions of people from their homes, as well as leaving an unknown number of civilians dead and injured. It has also shaken the world economy, especially through its effect on the prices and availability of food, fertilizer and fuel, crucial exports from Ukraine and Russia.

(With information from AP and EFE)

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