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A price cap on Russian oil exports agreed to by the G-7 goes into effect today

STEVE INSKEEP, HOST:

This is the day much of the world says it will get serious about blocking Russian oil profits.

RACHEL MARTIN, HOST:

The European Union bans Russian oil as of today. Russia will continue selling oil elsewhere in the world. But as we've reported, Europe has a plan to cut the oil profits that power Russia's war in Ukraine. Europe dominates the insurance industry and won't insure oil tankers unless the oil price is very low.

INSKEEP: All of this could affect global oil markets depending on what the world's other producers do. And NPR's international affairs correspondent Jackie Northam is following that. Jackie, good morning.

JACKIE NORTHAM, BYLINE: Good morning, Steve.

INSKEEP: OK. OPEC+, these major oil producers, Saudi Arabia and so forth, met and decided they're not going to do anything yet having to do with their production amounts, which can affect the price of oil around the world. Why?

NORTHAM: Well, largely because OPEC+ is uncertain what's going to happen now that the Western bans are taking effect. As you said, all seaborne imports of Russian oil to EU countries is banned as of today. And remember, before the Ukraine war, Europe was Russia's largest oil customer. And then there's the G7 price caps on Russian crude sold throughout the rest of the world. And that's set at $60 a barrel.

So you're talking about the potential of a million, 2 million barrels coming off the market. You can imagine the impact on prices. But, you know, it's uncertain if that will happen. We could see some major shifts in the global oil market. We just don't know. It seems OPEC+ wants to wait and see how this is going to play out. And, you know, it has said that it is ready to meet again at any time to make changes if necessary.

INSKEEP: As you have told us, Europe has the power since they control the insurance industry. But is Russia really going to allow its profits to be cut this way?

NORTHAM: Well, oil is Russia's main moneymaker, so obviously it wants to keep selling it. President Vladimir Putin has long warned Russia will not sell any to countries taking part in this price cap. And that was repeated yesterday by Russian Deputy Prime Minister Alexander Novak. You know, Russia has options, frankly. The way the cap is supposed to be enforced is that no tanker will be insured if it's selling at a price higher than the cap.

But analysts I've spoken to say Russia has amassed about a hundred oil tankers, you know, a lot of refurbished ships that they're putting back on the water. And they're described as a shadow fleet of vessels. And these will help move some of Russia's oil, circumventing the cap, even if it's not the same amount that they traditionally have produced and exported, you know, which means you could be looking at Russia having to shut down wells if they can't get all the oil out and something that Russians say they're prepared to do if they have to.

INSKEEP: Some people will be asking, because they drive cars or whatever, what about me? What's this mean for me? So how could Europe and the United States keep all of these efforts from raising global oil prices and wrecking Western economies?

NORTHAM: Well, there's certainly no guarantees. And you could see, you know, some effects immediately. But, you know, the EU ban on seaborne imports of Russian oil is set in stone, Steve. There's no going back on that. And Russia has been slowly weaning itself on oil and trying to set up new countries to get its oil. The G7 plan for the price cap, you know, that's never been tried before. So we're going to have to see how that works. But there's a lot of weak points and loopholes in the plan, particularly some of its major - Russia's major customers, such as China, India and Turkey. You know, they've been on a buying spree of heavily discounted Russian oil. They've not signed on to the plan at all. So we're going to have to see how this shakes out.

INSKEEP: NPR's Jackie Northam. Thanks so much.

NORTHAM: Thanks so much, Steve. Transcript provided by NPR, Copyright NPR.

Jackie Northam is NPR's International Affairs Correspondent. She is a veteran journalist who has spent three decades reporting on conflict, geopolitics, and life across the globe - from the mountains of Afghanistan and the desert sands of Saudi Arabia, to the gritty prison camp at Guantanamo Bay and the pristine beauty of the Arctic.