The European Union will be banning the insurance and financing of naval vessels transporting Russian oil selling for higher than the price cap imposed by Brussels, the European Commission said on Saturday, noting that the ban will be in effect for three months.

The European Union reached an agreement on setting a price cap on Russian oil at $60 a barrel, keeping a review mechanism to keep the price cap at 5% under market value. 

Kremlin spokesperson Dmitry Peskov commented on the bloc's decision, saying the price cap that was imposed on Russian oil abroad is unacceptable for Russia, but Moscow will be analyzing it and deciding how to operate under the new circumstances.

"If a third country flagged vessel intentionally carries Russian oil above the price cap, EU operators will be prohibited from insuring, financing, and servicing this vessel for the transport of Russian oil or petroleum products for 90 days after the cargo purchased above the price cap has been unloaded," the European Parliament's statement said.

A senior EU official told journalists in Brussels that the sanctions would be applied if a vessel arrives in Europe carrying Russian oil above the price cap. Each EU member state will prosecute European operators non-compliant with the scheme, the source said.

Major oil producers are expected to adhere to their current output strategy and even cut down oil production further in their coming meeting on Sunday amid falling oil prices, a coming Russian oil price cap, and sanctions.

The last time OPEC+ convened in October, a decision spearheaded by Saudi Arabia and Russia cut oil production by 2 million barrels per day starting November. 

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The OPEC+ oil production reduction is the most substantial cut since the COVID-19 pandemic peak in 2020. 

Moscow was anticipating the price cap and is now analyzing the situation, the spokesman underlined.]

Europe to live without Russian oil

Russia's Permanent Representative to International Organizations in Vienna, Mikhail Ulyanov, declared earlier in the day that the European Union will have to live without Russian oil starting this year as a repercussion of the price cap imposed on the country's oil.

He also recalled how Moscow had made it clear that it will supply oil to the countries that supported the price cap that he described as "anti-market".

Starting from this year #Europe will live w/o Russian oil. #Moscow has already made it clear that it will NOT supply #oil to those countries who support anti-market price cap. Very soon the #EU will blame #Russia for using oil as a weapon.

— Mikhail Ulyanov (@Amb_Ulyanov) December 3, 2022

Western nations have been trying to find ways to reduce Russia's income from oil and gas exports since the start of the war in Ukraine.

Russia had pledged to stop exporting its oil to countries that would apply price caps on its oil.

Meanwhile, those who violate the price cap on Russian oil exports will suffer consequences under the domestic law of the jurisdictions enforcing the quota, according to US Deputy Treasury Secretary Wally Adeyemo.