Crypto News: Little pain

European sanctions against Russian oil kick in today in a historic intervention in the global market. All eyes are now on how the Kremlin reacts.

The European Union and the UK will stop buying most seaborne Russian oil. More importantly, they will also block anyone else from using their insurance and shipping services to move Russian crude around the world unless it's purchased under a price cap.

Key reading:

Europe's New Sanctions on Russian Oil Kick In: What Changes?
The G-7 Oil Price Cap Looks Set to Keep Russian Oil Flowing
Russia Won't Accept $60 Price Cap on Its Oil, Kremlin Says
Price Cap on Russian Oil Won't Impact India, Oil Minister Says
Follow our rolling coverage of the war here.

The aim is to keep Russian oil flowing to importers like China and India, while curbing President Vladimir Putin's revenue and hitting at his ability to finance his war in Ukraine.

At $60, the cap is set so high — above the current market price for Russian barrels — that buyers and sellers can simply claim it's business as usual. That seems to be the line India is taking. Russian Foreign Minister Sergei Lavrov made a similar point last week.

But the risk to oil markets — and indeed the global economy — is that Russia retaliates by shutting off the taps. Deputy Prime Minister Alexander Novak has signaled that's an option.

And if Russia does close off supply, there's no guarantee that its allies in OPEC would step into the breach. OPEC+ cut production in October, and held steady at its meeting yesterday.

US efforts to get Saudi Arabia to put more oil on the market failed spectacularly earlier this year.

So far at least, Riyadh is putting its ties with Moscow first. — Emma Ross-Thomas

Oil pumping jacks in the Republic of Bashkortostan, Russia, in 2020. Photographer: Andrey Rudakov/Bloomberg

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