Zelensky says price cap level on Russian oil 'not serious'
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Ukrainian President Volodymyr Zelensky criticizes the European Union for the price cap imposed on Russia, saying it should have done more.
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Ukrainian President Volodymyr Zelensky during an interview with The Washington Post at his office in Kiev, Ukraine, August 8, 2022 (The Washington Post)
The $60 price cap imposed on Russian oil and agreed upon by the European Union, the Group of Seven, and Australia, is not "serious", Ukrainian President Volodymyr Zelensky said Saturday, explaining that the decision was "quite comfortable" for Moscow.
"Russia has already caused huge losses to all countries of the world by deliberately destabilizing the energy market," the Ukrainian head of state claimed, calling the decision taken by the West on the price cap as one coming from "a weak position".
It is "only a matter of time when stronger tools will have to be used anyway", Zelensky further argued. "It is a pity that this time will be lost."
The Ukrainian president also said the price cap should be halved. "The logic is obvious: if the price limit for Russian oil is $60 instead of, for example, $30, which Poland and the Baltic countries talked about, then the Russian budget will receive about a hundred billion dollars a year."
Baltic nations have recently expressed opposition at the idea that a price cap should be set above $50 per barrel.
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.
"This money will also be used to further destabilize precisely those countries that are now trying to avoid big decisions," Zelensky said.
Poland was particularly staunchly opposed to the price cap being set this "high" trying to hold out for a lower level of $30 before finally agreeing to the $60.
The European Union reached an agreement on setting a price cap on Russian oil at $60 a barrel, keeping a review mechanism to keep the price cap at 5% under market value.
Read more: OPEC+ may further cut oil production following Russian price cap
Major oil producers are expected to adhere to their current output strategy and even cut down oil production further in their coming meeting on Sunday amid falling oil prices, a coming Russian oil price cap, and sanctions.
The last time OPEC+ convened in October, a decision spearheaded by Saudi Arabia and Russia cut oil production by 2 million barrels per day starting November.
The OPEC+ oil production reduction is the most substantial cut since the COVID-19 pandemic peak in 2020.
Moscow was anticipating the price cap and is now analyzing the situation, the Kremlin press secretary Dmitry Peskov.
Furthermore, the European Commission earlier that the European Union would be banning the insurance and financing of naval vessels transporting Russian oil selling for higher than the price cap imposed by Brussels, noting that the ban will be in effect for three months.
"If a third country flagged vessel intentionally carries Russian oil above the price cap, EU operators will be prohibited from insuring, financing, and servicing this vessel for the transport of Russian oil or petroleum products for 90 days after the cargo purchased above the price cap has been unloaded," the European Parliament's statement said.
A senior EU official told journalists in Brussels that the sanctions would be applied if a vessel arrives in Europe carrying Russian oil above the price cap. Each EU member state will prosecute European operators non-compliant with the scheme, the source said.
Europe to live without Russian oil
Russia's Permanent Representative to International Organizations in Vienna, Mikhail Ulyanov, declared earlier in the day that the European Union will have to live without Russian oil starting this year as a repercussion of the price cap imposed on the country's oil.
He also recalled how Moscow had made it clear that it will supply oil to the countries that supported the price cap that he described as "anti-market".
Western nations have been trying to find ways to reduce Russia's income from oil and gas exports since the start of the war in Ukraine.
Russia had pledged to stop exporting its oil to countries that would apply price caps on its oil.
Meanwhile, those who violate the price cap on Russian oil exports will suffer consequences under the domestic law of the jurisdictions enforcing the quota, according to US Deputy Treasury Secretary Wally Adeyemo.
