European Union officials set Russian oil price cap at $60 a barrel

Environment

Russia’s President Vladimir Putin
Contributor | Getty Images News | Getty Images

The European Union on Friday agreed to cap Russian seaborne oil prices at $60 a barrel, after several days of intense negotiations over an appropriate level.

The announcement comes after the G-7 group of advanced economies agreed in September to impose a limit on Russian seaborne crude and therefore constrain revenues the Kremlin makes from the commodity. However, details on how the cap would work in practice have been debated and hashed out since that point.

Russia, amid its onslaught in Ukraine, has warned that an oil price cap could wreak havoc on the energy markets and push commodity prices even higher.

The price limit will be reviewed regularly to monitor its market ramifications, but it should be “at least 5% below the average market price,” an EU document with details of the cap said.

Negotiations had been held up by Poland, with ministers in Warsaw scrutinizing but then agreeing to the 5% adjustment mechanism. A formal announcement is expected Sunday.

Energy analysts have warned that the G-7 will need support from other major buyers if the cap is to be effective. China and India, for instance, increased their purchases of Russian oil following the invasion of Ukraine to benefit from discounted rates offered by Moscow.

Kadri Simson, European commissioner for energy, told CNBC in September that China and India should support the measure. “It is unfair to pay excess revenues to Russia,” Simson said at the time.

But there seems to be little appetite from these nations to comply with the cap. India’s petroleum minister, Shri Hardeep S Puri, told CNBC in September he has a “moral duty” to his country’s consumers. “We will buy oil from Russia, we will buy from wherever,” he added.

Correction: This story has been updated to correct the date of the announcement.

Products You May Like

Articles You May Like

Why X’s new terms of service are driving some users to leave Elon Musk’s platform
Irish star Paul Mescal bluntly appraises his meeting with the King
More prisoners moved to less secure jails to tackle overcrowding crisis
Three Mile Island restart could mark a turning point for nuclear energy as Big Tech influence on power industry grows
EVgo to add up to 480 new EV fast chargers at Meijer locations across the Midwest

Leave a Reply

Your email address will not be published. Required fields are marked *