Europe, the United States impose two tough measures against Russia

Europe, the United States impose two tough measures against Russia

The embargo has been in place for months, so there isn't an immediate impact on oil supplies in Europe.

On Monday, Europe and the United States imposed two of the toughest measures aimed at curbing Russia's income from oil, the main source of cash used to fund its nearly 10 month-old war in Ukraine. The first, a price cap initiative by the United States, aims to increase economic pressure on the Kremlin while avoiding a global oil shock. The limit was set at $60 per barrel and was endorsed by the Group of 7 countries, Australia, and members of the European Union. The second is an embargo under which European nations will no longer be able to buy Russian crude as of Monday. It was a step that the European Union had agreed to months ago, but it was phased in with exceptions to prepare member nations. The international benchmark, Brent crude, was up by 2.5 percent, to $87.75 a barrel, at midday in Europe, with prices gyrated in the oil markets on Monday. West Texas Intermediate futures were selling at $82 a barrel.

The United States and European countries have been mandating European shippers and insurers to enforce it by refusing to handle cargoes priced above the $60 a barrel level, which leads to skepticism about the effectiveness of the measures. The data about pricing Russian oil has become scarce in recent months, according to analysts. Viktor Katona, an analyst at Kpler, said few if any trades are reported, and prices quoted in the market are mostly based on hearsay. Russia will not accept a price cap and has threatened to cut off supplies to countries that don't comply with the arrangement. If Russia followed through on such steps and restricted oil as it has natural gas flows to Europe, it could cause havoc on the oil market markets. According to Tass, the Russian state-owned news agency, the measures will have an impact on the stability of the global energy market, as well as the embargo and price cap, the Kremlin spokesman said on Monday. According to analysts, Russia has been building a so-called shadow fleet of old tankers to export its oil and avoid the E.U. They don't believe that it can assemble a large enough flotilla. Russia may need to start closing down wells if it can't. The G 7 nations — the United States, Canada, Britain, Germany, France, Italy and Japan — have stopped buying Russian oil, so any problems with a decline in Russia s exports could damage the economies of countries like China and India, big customers who have refused to condemn Russia's invasion of Ukraine. The price cap and the embargo were the main reasons that OPEC and its allies decided to leave their quotas for oil production unchanged, because of the looming embargo and price cap. There are a number of economic uncertainties, including a stumbling economy in China, and crippling inflation in the world that are fuelling fears of a recession, and the group, known as OPEC Plus, appears to have decided not to change its policy. Many analysts believe that Saudi Arabia, the de facto leader of the producers group, is seeking a price of $90 a barrel for Brent crude. The Saudis would probably cut production if prices fell significantly from that level, according to market watchers.