Putin's strategy to overthrow the global economic order runs into trouble.

A new phase in the economic conflict between Russia and the West began on December 5 with the implementation of a $60 per barrel price cap on Russian seaborne oil that had just been agreed upon by the European Union, the G7, and Australia.

Although the price cap appears to be largely misunderstood, it may be one of the most significant responses to Russia's weaponization of its energy reserves since the start of its all-out invasion of Ukraine.

Contrary to popular belief, there is no attempt to stop Russian oil exports with the price ceiling. Instead, it intends to make sure that they keep flowing despite tougher laws and sanctions, albeit not to Western markets. Indeed, it is still legal for China, India, and many other third nations to continue buying Russian crude in big volumes and at steep discounts as of February. The cap's goal is to ensure that the existing discounts remain ongoing rather than to prevent these purchases by limiting Russia's revenues, which are primarily used to fund its war effort.

The international coalition fighting Russia's war on Ukraine has had difficulty reaching an agreement on the move; the final parameters were only accepted by all parties on December 2. The location of the cap was the problem. The nations ultimately chose to put it at $60, which is higher than the price at which the majority of Russian crude was selling just before the limit. Poland was the last holdout, and it was undoubtedly the country in Europe that was most supportive of Ukraine after Russia's invasion. Russia would still make a profit from the barrels it exports if the cap were established at that level, as Volodymyr Zelenskyy of Ukraine and Warsaw also criticized.

But in the end, all sides agreed to a $60 cap because they understood that at that price, Russia's earnings could be severely curtailed without seriously upsetting the global oil markets and perhaps driving up everyone's prices. In fact, a lower price cap would have likely compelled Russia to take dramatic measures, such ceasing all exports, harming those countries that also import oil alongside Russia.

Despite its cries and groans that any price caps would be an unforgivable breach of its sovereignty, the Kremlin has already been exporting its oil at significant discounts since February. Therefore, a cap of $60 is actually just an attempt to make the current system permanent.