A price cap on Russian seaborne oil – agreed to by the European Union, the Group of Seven nations and Australia – has come into force.
The $60-per-barrel cap on Russian crude is aimed at limiting Moscow’s income and curbing its ability to finance its war in Ukraine.
The deal has been criticised by Ukraine, which has said the cap is still higher than the current market price for Russian oil and won’t make much of a dent in Moscow’s war chest.
The Kremlin has said it won’t abide by the cap even if it means it will have to cut production. And Russia’s largest oil buyers – China and India – have not committed to the oil ceiling.
The cap took effect on Monday, a day after OPEC+ agreed to stick to its oil output targets.
How much oil does Russia produce?
Russia is a member of OPEC+, which is made up of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
OPEC consists of Algeria, Angola, Republic of the Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates and Venezuela. The allies are Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Oman, Russia, South Sudan and Sudan.
OPEC member countries produce about 40 percent of the world’s crude oil and represent 60 percent of the total petroleum traded internationally, according to the United States Energy Information Administration.
Russia is the second-largest producer of crude oil among OPEC+ members, coming in behind Saudi Arabia. It pumped more than 9.7 million barrels per day in October, according to the International Energy Agency (IEA).
Two months ago, OPEC+ members agreed to cut production by 2 million barrels per day from November until the end of 2023. The cut amounted to about two percent of world demand.