WASHINGTON : On Friday, the Group of Seven countries and Australia joined the European Union in imposing a $60-per-barrel price cap on Russian oil, a key step in Western sanctions aimed at reordering the global oil market to prevent price spikes and depriving President Vladimir Putin of funding for his war in Ukraine.

By Monday, when an EU embargo on Russian oil shipped by sea and a ban on insurance for those supplies go into effect, Europe needed to set the discounted price that other countries will pay. The G-7 wealthy democracies led the price cap, which aims to prevent a sudden loss of Russian oil to the world, which could lead to a new surge in energy prices and further fuel inflation.

The agreement comes after a last-minute flurry of negotiations. Poland long held up an EU agreement, seeking to set the cap as low as possible. U.S. Treasury Secretary Janet Yellen says it will help restrict Putin's "illegal war in Ukraine".

The cap is near the current price of Russian crude, which recently fell below $60 a barrel. Some criticize that as not low enough to cut into one of Russia's main sources of income.

There is a big risk to the global oil market of losing large amounts of crude from Russia. It could drive up gasoline prices for drivers worldwide, stirring political turmoil. Europe is already mired in an energy crisis, with governments facing protests over the soaring cost of living.

The cap is intended to limit Russian President Vladimir Putin's ability to profit from oil sales. Russia's oil revenues rose sharply after the pandemic and invasion of Ukraine.

More uncertainty is ahead, however. COVID-19 restrictions in China and a slowing global economy could mean less thirst for oil. That is what OPEC and allied oil-producing countries, including Russia, pointed to in cutting back supplies to the world in October. The OPEC+ alliance is scheduled to meet again Sunday.

That competes with the EU embargo that could take more oil supplies off the market, raising fears of a supply squeeze and higher prices. Russia exports roughly 5 million barrels of oil a day.

Putin has said he would not sell oil under a price cap and would retaliate against nations that implement the measure. However, Russia has already rerouted much of its supply to India, China and other Asian countries at discounted prices because Western customers have avoided it even before the EU embargo.

Most insurers are located in the EU or the United Kingdom and could be required to participate in the price cap.

Russia also could sell oil off the books by using “dark fleet” tankers with obscure ownership. Oil could be transferred from one ship to another and mixed with oil of similar quality to disguise its origin.

Even under those circumstances, the cap would make it “more costly, time-consuming and cumbersome” for Russia to sell oil around the restrictions, said Maria Shagina, a sanctions expert at the International Institute for Strategic Studies in Berlin.

Robin Brooks, chief economist at the Institute of International Finance in Washington, said the price cap should have been implemented when oil was hovering around $120 per barrel this summer.

“Since then, obviously oil prices have fallen and global recession is a real thing,” he said. “The reality is that it is unlikely to be binding given where oil prices are now.”

European leaders touted their work on the price cap, a brainchild of Yellen.

“The EU agreement on an oil price cap, coordinated with G7 and others, will reduce Russia’s revenues significantly,” said Ursula von der Leyen, president of the European Commission, the EU’s executive arm. “It will help us stabilize global energy prices, benefiting emerging economies around the world.”