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The G7, the European Union and Australia imposed the $60 per barrel cap last December on sea-borne exports of Russian crude in retaliation for Russia's war on Ukraine. It bans Western companies from providing services such as transportation, insurance and financing for the oil sold above the cap.

This is the first instance of Urals breaching the US-led G7 price cap on Russian seaborne crude, which took effect from early December. The price limit forbids transportation of Russian oil on Western ships and use of Western insurance services if the cargoes are priced over $60 per barrel.

The G7 introduced its oil price cap mechanism on Dec. 5 to retain Russian flows in the market while limiting revenue for the Kremlin's war coffers. Several crude oil traders attributed the Russian crude price increase to underlying hikes in global oil prices, as Moscow and Riyadh tighten supplies.

For goods falling under either HS heading 2709 or HS heading 2710, the price cap(s) are applicable from receipt of the oil or oil products (as cargo) on a ship, up to the point where it is delivered and passes through customs controls in a third country or is substantially processed off the water.

The G7 and Australia (G7+), who collectively constitute the Price Cap Coalition, agreed to cap the price of Russian seaborne oil and refined oil products in September 2022 as a way to undermine Putin's ability to fund his illegal war in Ukraine through inflated global oil prices, while ensuring that third countries can ...

The price cap policy incentivizes the continued sale of oil and petroleum products on to the market at a steep discount from Russia's wartime premium. In December 2022, the Coalition set the price cap on Russian crude oil at $60 per barrel.

Since December 2022, the members of the Price Cap Coalition (PCC), composed of Australia, Canada, the EU, Japan, the UK, and the US, have introduced three different price caps, which are currently in force and subject to periodic revision.