Price cap on Russian oil comes into force; Moscow to sell at market price

The Group of Seven price cap on Russian seaborne oil came into force today, Dec. 5, but Russia refused to abide by the measure even if it has to cut production.

The group set the price cap at $60 per barrel, not much below the $67 level where it closed on Friday. The European Union (EU) and G7 countries expect Russia will still have the incentive to continue selling oil at that price, while accepting smaller profits, Reuters reported.

Russia, the world's second-largest oil exporter, said it would not accept the cap and would not sell oil subject to it, even if it has to cut production.

The cap level will be reviewed by the EU and the G7 every two months, with the first such review in mid-January.

"This review should take into account the effectiveness of the measure, its implementation, international adherence and alignment, the potential impact on coalition members and partners, and market developments," the European Commission said in a statement.

The price cap, to be enforced by the G7, the EU and Australia, comes on top of the EU's embargo on imports of Russian crude by sea and similar pledges by the United States, Canada, Japan and Britain.

The cap on crude will be followed by a similar measure affecting Russian petroleum products that will come into force on Feb. 5, though the level of that cap is yet to be decided, Reuters reported.