Oil prices rose 1.5% in London, rising to $86.87 a barrel, after the price cap on Russia crude took effect
The European Union and U.K. barred inbound shipments of Russian crude Monday—a watershed for a continent striving to end its dependence on Russia’s fossil fuels after Moscow invaded Ukraine and weaponized supplies of natural gas. In tandem, the EU, the U.S. and alliesThe restrictions are the first major attempt to curb Moscow’s fossil-fuel revenue, which steadied the Russian economy after a barrage of sanctions on other industries.
How Russia responds is the first big unknown for traders and officials. On Sunday, Deputy Prime Minister Alexander Novak said the Kremlin was considering ways in which it could ban companies from applying the price cap, and that output could fall. Monthslong negotiations over the level at which the cap should be set went down to the wire Friday, leaving traders, shippers, refiners and insurers with little visibility until days before the sanctions took effect. Their wariness made it challenging for Russian producers to sell cargoes.What will be the ripple effects of sanctions on Russian oil? Join the conversation below.
OPEC+, an alliance between the Organization of the Petroleum Exporting Countries, Russia and other producers, acknowledged the unsettled backdrop Sunday. The cartelto give it more time to assess the market effect of the price cap at a virtual meeting. But Russia is putting some oil onto boats unsold and sending them toward Asia in the hope of finding a buyer en route. Ms. Gallarati of Energy Aspects estimates that between 300,000 barrels and 400,000 barrels of Russian crude that set sail daily in November haven’t been sold. In total, Russia exported 4.5 million barrels of crude each day last month.
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