Ukraine, US welcome Russian oil price cap

Ukraine on Saturday welcomed a $60 price cap on Russian oil agreed by the EU, G7 and Australia, saying it would "destroy" Russia's economy.

The price cap, previously negotiated on a political level between the G7 group of wealthy democracies and the European Union, will come into effect with an EU embargo on Russian crude oil from Monday.

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.

"We always achieve our goal and Russia's economy will be destroyed, and it will pay and be responsible for all its crimes," Ukraine's presidential chief of staff Andriy Yermak said on Saturday on Telegram.

But a cap of "$30 would have destroyed it more quickly", he added.

The G7 said it was delivering on its vow "to prevent Russia from profiting from its war of aggression against Ukraine, to support stability in global energy markets and to minimise negative economic spillovers of Russia's war of aggression".

The White House described the deal as "welcome news", saying a price cap will help limit Russian President Vladimir Putin's ability to fund the Kremlin's "war machine".

The US described the oil price cap as an “important tool” that will benefit emerging markets and low-income economies and further cripple Russia's finances.

“The price cap will encourage the flow of discounted Russian oil onto global markets and is designed to help protect consumers and businesses from global supply disruptions,” US Treasury Secretary Janet Yellen said on Friday.

“The price cap will particularly benefit low- and medium-income countries who have already borne the brunt of elevated energy and food prices exacerbated by Putin’s war,” she said after G7, European Union, and Australia jointly set a cap on the price of seaborne Russian crude oil.

Next week, the Price Cap Coalition will ban a broad range of services— including maritime insurance and trade finance— related to the maritime transport of crude oil of Russian Federation origin unless purchasers buy the oil at or below USD 60-per-barrel.

Russia reaction

Russia said on Saturday it would continue to find buyers for its oil, despite what it said was a "dangerous" attempt by Western governments to introduce a price cap on its oil exports.

A coalition of Western countries led by the G7 group of nations agreed on Friday to cap the price of Russian seaborne oil at $60 a barrel, as they aim to limit Moscow's revenues and curb its ability to finance its invasion of Ukraine.

Russian President Vladimir Putin and high-ranking Kremlin officials have repeatedly said that they will not supply oil to countries that implement the price cap.

In comments published on Telegram, Russia's embassy in the United States criticised what it said was the "reshaping" of free market principles and reiterated that its oil would continue to be in demand despite the measures.

"Steps like these will inevitably result in increasing uncertainty and imposing higher costs for raw materials' consumers," it said.

"Regardless of the current flirtations with the dangerous and illegitimate instrument, we are confident that Russian oil will continue to be in demand."

The G7 price cap will allow non-EU countries to continue importing seaborne Russian crude oil, but it will prohibit shipping, insurance and re-insurance companies from handling cargoes of Russian crude around the globe, unless it is sold for less than the price cap.

• Business