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What to Know About the Russian Oil Price Cap

The global oil market has entered largely uncharted territory.

By , a reporter at Foreign Policy.
European Commission President Ursula von der Leyen holds a press conference.
European Commission President Ursula von der Leyen holds a press conference.
European Commission President Ursula von der Leyen holds a press conference at EU headquarters in Brussels on Sept. 28. KENZO TRIBOUILLARD/AFP via Getty Images

Welcome to today’s Morning Brief, where we’re looking at the Russian oil price cap, South African President Cyril Ramaphosa’s political survival, and Ukraine’s strikes on Russian military bases.

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What to Know About the Russian Oil Price Cap

Welcome to today’s Morning Brief, where we’re looking at the Russian oil price cap, South African President Cyril Ramaphosa’s political survival, and Ukraine’s strikes on Russian military bases.

If you would like to receive Morning Brief in your inbox every weekday, please sign up here.


What to Know About the Russian Oil Price Cap

The global oil market entered largely uncharted territory this week after a price cap on Russian crude oil kicked in on Monday, the result of months of tense negotiations and diplomatic wrangling among divided Western nations.

The measure, which would cap the price of seaborne Russian crude oil at $60 per barrel, is supposed to deprive the Kremlin of critical revenue. It took effect the same day as a sweeping European Union sanctions package that largely bans Russian crude oil imports and prohibits companies in the bloc from offering crucial maritime services, such as insurance, to tankers transporting Russian oilexcept if it falls under the cap.

The $60 per barrel amount drew criticism from Ukrainian President Volodymyr Zelensky, who had pushed for a lower ceiling to fully starve the Kremlin’s war effort. Officials were “trying to avoid hard decisions,” he said

In setting the price cap, experts say negotiators were trying to reconcile two contradictory demands: deprive Russia of its oil revenue while simultaneously keeping Russian oil on the market to shield their own economies from further pain. Officials were worried about the potential economic shock of the EU sanctions, experts said, so set the price cap to help mitigate any disruptions.

“We’re seeing Western governments try and maintain the volume of oil but limit or reduce the revenue,” said Richard Bronze, co-founder of Energy Aspects, who described it as a “really difficult balancing act.”

Raad Alkadiri, an energy expert at the Eurasia Group, put it more bluntly. “It’s an effort by industrialized countries to have their cake and eat it too,” he said. 

What that will look like in practice is still unclear and will likely be very messy. Under the policy, the onus would be on initial buyers and companies to prove that they have complied with the price cap, raising questions about potential forgeries and falsified documentation. 

Russia, for its part, has insisted that it will “not accept” the cap and has rejected doing business with other nations that observe it. Moscow has also rounded up a fleet of “shadow” tankers to bypass the new constraints, the Financial Times reported, further complicating enforcement methods. FP’s Elisabeth Braw wrote on this “ghost fleet” and how certain EU companies had, prior to this week, helped Russia bypass sanctions.

This is new territory,” Bronze said. “That’s just adding some uncertainty in terms of how it’s going to play out, certainly through the next few months, until we get some practical evidence of the enforcement approach.”


What We’re Following Today

Ramaphosa holds on—for now. South Africa’s ruling party, the African National Congress (ANC), has publicly backed President Cyril Ramaphosa after an explosive panel report found that he may have broken the country’s laws, potentially setting the stage for an impeachment hearing. The country’s Parliament, which will determine whether to proceed with an impeachment hearing, is dominated by ANC members—although some of them belong to a rival faction opposed to Ramaphosa. The decision has been postponed until next week.

Over the weekend, Ramaphosa spurned calls for his resignation. “President Ramaphosa is not resigning based on a flawed report, neither is he stepping aside,” said spokesperson Vincent Magwenya

Blasts hit Russian air bases. Explosions rocked two Russian military bases located hundreds of miles away from the Russian-Ukrainian border on Monday; Russia said Ukrainian forces launched the attacks and said three people were killed. Ukraine has not publicly claimed responsibility for the strikes, although a senior Ukrainian official confirmed that Kyiv was behind the attack, the New York Times reported. 

Mykhailo Podolyak, an advisor to Zelensky, seemed to refer to the strikes on Twitter on Monday. “The Earth is round—discovery made by Galileo,” he tweeted. “If something is launched into other countries’ airspace, sooner or later unknown flying objects will return to departure point.”


Keep an Eye On 

Deepening UAE-Ukraine ties. The United Arab Emirates and Ukraine have decided to start trade discussions, Emirati officials announced on Monday. Talks will likely run into mid-2023.

“This is part of our economic diversification process,” said Thani bin Ahmed Al Zeyoudi, the UAE’s minister of state for foreign trade. “Ukraine will be a gateway to many European nations and is a step towards penetrating the European market.”


Monday’s Most Read

Sanctions on Russia Are Working. Here’s Why. by Agathe Demarais

Scotland’s Independence Dream Hits a Dead End by Jamie Maxwell

Europeans Have Weapons but Aren’t Warriors by Alexis Carré


Odds and Ends 

The term goblin mode has beat out both “metaverse” and “#IStandWith” to claim the title of Oxford Word of the Year 2022. Defined by Oxford Languages as “a type of behavior which is unapologetically self-indulgent, lazy, slovenly, or greedy, typically in a way that rejects social norms or expectations,” the term ultimately secured 318,956 votes. It follows previous winners “vax,” “climate emergency,” and “selfie.”

“People are embracing their inner goblin, and voters choosing ‘goblin mode’ as the Word of the Year tells us the concept is likely here to stay,” said Oxford Languages President Casper Grathwohl.

Christina Lu is a reporter at Foreign Policy. Twitter: @christinafei

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