Russia Oil Cap Explained for dummies
Russia Oil Cap Explained for dummies
The G7 countries, EU, Australia and the US have set caps on Russian oil products effective from Feb 5 2023, at 60 dollars per barrel of petrol.
What this basically means is that Russia cannot sell petrol barrels to countries in the G7, EU and Australia at more than 60 dollars a barrel. This was done in an effort to cut war funding for Russia for the Russian-Ukraine war.
Then later Russia replied by sanctioning that they will not be dealing with any country that would follow the 60 dollar price cap. Russia basically gave the finger to the biggest sanction they ever got.
The reply was a shocking but not a surprise as we know that Russia will not just roll over and let the US have their way. If they US wants to meddle with Russia's economy then Russia will fight back. Shortly after Putin announced that Russia is suspending it's participation in the 2010 New START treaty, which was it's only nuclear arms pact with the US.
The big question is wether this will actually do anything to Russia's oil revenue or not because at this point Russia has many other countries to go to, India for example, and they can now demand any price they want. And countries like India, are looking like they are ready to pay up with a surge of Russian oil imports to India increasing 20 times in 2022.
For a more in depth analysis, you can read this article by the LiveMint
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