Putin's aim to challenge the global economic system has hit a snag.

On December 5, a $60 per barrel price cap on Russian seaborne oil, agreed upon just a few days earlier by the European Union, the G7, and Australia, went into effect, ushering in a new phase in the economic battle between Russia and the West.

The price ceiling may be one of the most significant retorts to Russia's weaponization of its energy reserves since the start of the country's all-out invasion of Ukraine, but what it comprises and intends to achieve appears to be largely misunderstood.

Contrary to popular belief, the price cap is not intended to terminate Russian oil exports. On the contrary, it seeks to keep them flowing despite tougher laws and sanctions - but not to Western markets. Indeed, China, India, and many other third-country buyers who have been buying Russian crude in big quantities and at steep discounts since February are still free to do so. The cap's objective is not to hinder these purchases, but to limit Russia's profits, which are primarily used to fund the country's war effort, by guaranteeing that the current discounts are permanent.

The international coalition opposing Russia's war on Ukraine has struggled to get an agreement on the move; its final provisions were only accepted by all parties on December 2. The stumbling block was deciding where to place the cap. The countries eventually agreed to put it at $60, which was more than the price at which most Russian oil was selling on the eve of the restriction. Poland was the last holdout in Europe, possibly the most supportive of Ukraine following Russia's invasion. Warsaw agreed with Ukrainian President Volodymyr Zelenskyy that putting the cap at that level would mean Russia would still profit from the barrels it sells.

However, all parties eventually agreed on a cap of $60 because they understood that at that level, Russia's earnings could be greatly restricted without triggering a big disruption in global oil markets, which might send prices rising for everyone. Indeed, a lower price restriction would have obliged Russia to take severe measures, such as suspending all exports, harming all oil-importing countries alongside Russia.

Despite its protests that price ceilings are an unacceptable breach of its sovereignty, the Kremlin has already been exporting oil at significant discounts since February. In reality, a maximum of $60 is simply an attempt to make the current arrangement permanent.