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25 Nov, 2022 16:58

EU fails to reach agreement on Russian oil price cap – Bloomberg

Attempts to agree a deal have stalled as some member states called it “too generous” to Moscow
EU fails to reach agreement on Russian oil price cap – Bloomberg

EU leaders failed once again on Friday to reach an agreement on setting a price ceiling for Russian crude oil shipped by sea, sources told Bloomberg.

The deadlock persists as members are split over how low the maximum price should be to effectively cut Moscow's oil revenues.

Several nations, including Poland and the Baltic States, oppose the European Commission's proposal to set a $65 to $70 per barrel limit, claiming it is “too generous.” While Poland is proposing a $30 cap, member states with major shipping industries like Greece and Malta insist the ceiling should not be below $70.

According to anonymous sources cited by the agency, diplomats are optimistic they can finalize the deal soon. Brussels is under pressure since EU sanctions on Russian oil are scheduled to come into force on December 5.

The possibility of a regular price review has reportedly been floated as a potential compromise.

If approved, the measure would be implemented together with the Group of Seven nations, and would ban Western companies from providing insurance, brokerage or financial assistance to ships transporting Russian crude, unless the cargo is purchased below an agreed price. It is hoped the ceiling would allow Russian production to remain at pre-sanctions levels, avoiding turmoil in global oil markets.

The levels under discussion have been criticized by some strategists, who say that Russia has been selling its oil at steep discounts after European buyers opted to shun the deliveries from the sanction-hit nation. That means the potential price cap at a higher level would in fact allow business as usual for Moscow.

Russia has threatened to stop exporting oil to countries that support the price cap. That could drive global oil prices higher, as the country is the world’s second largest exporter.

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