When US officials first floated the idea of ​​capping Russian oil export prices in response to a planned European embargo in March, they promised to cut revenue by targeting the Russian war machine while avoiding a catastrophic surge in commodity prices. But keeping Russian oil on the market and low global prices soon became a top priority as oil prices soared, people familiar with the development of the mechanism and energy industry analysts say.

The $60/bbl crude oil price ceiling set by the G7 and Australia on Monday confirms this in line with current market prices. Analysts note that this restriction will have a limited direct impact on the oil revenues currently received by Moscow. Russia said the restriction would not hurt funding for a “special military operation” in Ukraine.

The price ceiling is “a disappointing compromise that will do very little to reduce Russia’s oil revenues” from current levels, said Ben Cahill, an energy security expert at the Center for Strategic and International Studies in Washington.

Russian Urals crude for Europe traded at an average price of $55.97 a barrel on Tuesday, compared to a high of $61.35 a barrel on Sunday. Benchmark Brent fell to its lowest level since January below $80 a barrel on Tuesday, continuing its downward trend as heightened worries about global demand offset any positive impact of price caps on Russian oil sales.

Russian Urals oil averaged $55.97 a barrel on Tuesday, compared to a high of $60 a barrel.

A senior Treasury official told Reuters news agency that officials at the US Treasury, the driving force behind the G7 price cap, were trying to balance Russia’s revenue cuts with supply support, though market pricing itself was influencing that process, he said.

The official specified that the price cap “institutionalizes” the current discounts in the market. At the same time, he argued that the plan to set a price ceiling for Russian oil is also the main factor in the decline in the price of “black gold” in the past few months.

Analysts also attribute the fall in oil prices at the international level to the weakening of the global economy, tough measures to contain the pandemic in China, as well as the decision of OPEC + member countries to keep their production at a stable level.

Finally, at current peak price levels, Russia is reported to be making $10 to $15 billion a month from oil exports, said Bob Yauger, director of energy futures at Mizuho in New York, up from more than $21 billion in June. according to the International Energy Agency (IEA), as the price of Brent oil exceeded $120.