EU ministers told CNBC that a price cap on Russian oil will work despite attempts from the Kremlin to escape sanctions.
The EU, along with the G-7 and Australia, agreed on Friday to limit the purchases of Russian oil to $60 a barrel in order to curb Moscow's ability to fund its war in Ukraine.
The price cap went into effect. The measure states that oil produced in Russia cannot be sold for less than $60 a barrel. Most of the insurance companies are located in the G-7 nations.
Russia has already said that it will not sell oil to nations complying with the cap and that it is ready to cut production.
It was reported that it had put together a fleet of about 100 vessels to avoid oil sanctions. The Kremlin could sell its oil without needing insurance from the G-7 or other nations.
Ireland's finance minister said that the oil cap can work in reducing Russia's oil revenues.
He told CNBC that it was the right message at the right time.
India and China have been asked about their role in the implementation of the price cap.
Both nations have increased their purchases of Russian oil and are reluctant to agree to a cap. The minister does not fear the cap and expects the policy to have limited impact, according to a report.
France's Finance Minister Bruno Le Maire thinks it's worth trying.
He said that the consequences of the oil cap would be assessed.
There will be a review of the level of the cap in early23. This revision will be done periodically and the aim is to set it at least 5% below the average market price for Russian oil.
Ursula von der Leyen, president of the European Commission, said over the weekend that the limit on oil prices will help the bloc. Due to the war in Ukraine, the EU has had to reduce its dependence on Russian oil.
The market players are cautious about the policy's integrity.
The scale of the price cap's impact remains ambiguous. We have been skeptical of its success.
The risk of nations buying Russian oil at the agreed cap but then selling it at a higher price to Europe is real. Russia would make money from the commodity sales while Europe would pay more at a time when its economy is slowing down.
The cap on the price will probably not remove all the volume, but some will find their way to the markets.
The price of oil moved higher in London.
West Texas Intermediate futures traded 0.4% higher at around $77 a barrel.
The price of crude was higher in the morning but fell in the afternoon.
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