New Delhi: Many Western countries, including America, have imposed economic sanctions on Russia to harm Russia’s economy. Along with this, there is a price limit on Russian oil. Its main purpose is to reduce Russian revenues, thereby reducing Russian funds used in the war with Ukraine and weakening the Russian economy. But, the decision of Saudi Arabia and Russia has foiled the entire plan of America.
According to reports, on Monday, OPEC and Russia decided to cut their oil production by about 3.6 million barrels per day. Saudi Arabia is considered dominant in OPEC. OPEC Plus countries will cut oil production by about 1.6 million barrels per day. After this decision, the price of oil increased by about 6 percent. Until now, Russia could not sell oil above $60 per barrel due to the price cap imposed by the US and G-7 countries. But after the announcement of oil production cuts, the price of Russian oil also crossed $60 and the US price cap remained in place.
Let us tell you that when the US imposed a price cap on Russian oil, it did not have much impact on Russia’s oil production or revenue. Because Russian Ural oil was already trading below a fixed price of $60 per barrel. But now the Urals is trading above $60 a barrel, which is a blow to the US and the West.
Japan is buying Russian oil above the price cap
Japan, which has criticized India for buying oil from Russia, is also buying oil from Russia after cutting oil production. Also, Japan is buying Russian oil above the price cap ($60 per barrel). In clarification, Japan has said that it is forced to buy oil from Russia to meet its energy needs. That is why it should be considered an exception. America has also allowed Japan to buy oil from Russia. According to a report, in the first two months of the year, Japan bought about 7.5 million barrels of oil from Russia at a price of about $70 a barrel. Japan is not the only country that violates the price cap imposed on Russian oil. India is paying more than $60 per barrel to Russia.
America’s True Test
In such a scenario, it will be interesting to see whether Russian oil remains in control of the oil price cap amid a rise in global oil prices. Russia uses this pretext to sell oil above the price cap to compensate for its revenue, which has seen its revenue drop due to US sanctions. Saudi Arabia-dominated OPEC and Russia’s decision to cut oil production is seen as a test of the US-led price cap on Russian oil. However, the oil that Japan is buying from Russia is only a fraction of Russian oil exports. But Japan’s move shows that US-led efforts to impose price caps on Russian oil are waning.