EU agrees preliminarily to impose a $60 price cap on Russian oil

By Al Mayadeen English
Source: Agencies
1 Dec 2022 17:50
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The bloc is still waiting for Poland's approval on the price cap.

Russian oil tanker

Reuters reported on Thursday that the EU has tentatively agreed to impose a price cap on Russian oil at $60 per barrel.

They are still waiting for Poland's approval which pushed for lower levels, Reuters reported, citing a European diplomat.

According to the text of the EU proposal seen by the Wall Street Journal, at every review, the level should be "at least 5% below the average market price for Russian oil and petroleum products," which is indicative of a major concessionary move toward Poland.

The new proposal also includes a review clause that would take effect from January 2023 and require a review of the price cap system and price every two months, Bloomberg reported.

The price cap will come into full force by December 5, when all the bloc's nations will have reached a formal agreement on the level of the price cap.

Baltic nations have recently expressed opposition to the idea that a price cap should be set above $50 per barrel.

They believe that the price remains too high and that could potentially fuel profits for Russia, thus harming Ukraine.

On Tuesday, Politico reported that US diplomats negotiated with Baltic officials to convince the Visegrad Group, which is composed of the Czech Republic, Hungary, Poland, Slovakia, and the Baltic nations to agree to the amount of $62.

"The EU Commission originally proposed $65-70 per barrel for the price cap on Russian crude. The latest proposal, after the recent negotiations, was at $62. However, specific member states, Poland included, are pushing for further reduction. And the latest talks are near and even slightly below $62, which, I think, is most likely closer to the final number the EU will decide on the price cap per barrel on Russian crude," the source said.

The source added that even if EU states fail to reach an agreement, it is unlikely that the Commission may postpone the deadline for capping Russian oil which is set on December 5.

"There is a lot of pressure from the Commission to reach an agreement before December 5. And the idea for an extension to the oil embargo date came up during the talks. However, for different reasons it was dismissed for now," the source added.