European Union suggests implementing price cap on Russian oil at $45 per barrel
Reduction in Russian Crude Oil Price Cap Proposed by EU Leaders
Efforts are underway to reduce the current cap on Russian crude oil prices from $60 to $45 per barrel, as advocated by the European Commission and significant EU member states, according to reports from the Financial Times. Last week, Bloomberg reported that the EU had proposed this level to the G7 nations.
Whether all G7 countries will endorse the measure is undecided, with the Financial Times noting that during a meeting of G7 finance ministers last week, Canada suggested including stronger language on tightening the price cap in a joint statement. While France, Germany, and Italy expressed their support, the United States expressed skepticism, three sources informed the newspaper.
Meanwhile, within the EU, there is ongoing deliberation about the proposed price cap lowering. The European Commission and influential EU member states are advocating for a reduction to $45 per barrel as part of broader sanctions against Moscow. However, some EU members, such as Hungary and Greece, which have previously been hesitant, are still evaluating the proposal. Finland's Foreign Minister Elina Valtonen has even suggested a lower cap of $40 per barrel, while Ukraine has called for a more drastic reduction to $30 per barrel.
It's worth noting that the G7, EU, and Australia introduced a price cap on Russian oil in December 2022, which was subsequently expanded to oil products, depending on their type. The cap was set at $100 per barrel for diesel (premium compared to crude oil) and $45 per barrel for fuel oil (discounted).
Russia considers these sanctions illegal and has imposed a ban on the export of oil and oil products under contracts with price restrictions. This decree has been extended multiple times, with the latest extension until June 30.
The ongoing discussions about the price cap and potential changes will continue, with the final decision depending on further negotiations and agreement among the G7 nations.
The European Commission and significant EU member states, advocating for a reduction in the price cap, have proposed a decrease from $60 to $45 per barrel of Russian crude oil, as part of broader sanctions against Moscow. This proposal is currently under deliberation within the EU, with Finland's Foreign Minister Elina Valtonen suggesting an even lower cap of $40 per barrel. Meanwhile, the ongoing negotiations among the G7 nations are unclear regarding all members' endorsement, with the United States expressing skepticism.
The proposed price cap adjustments come amidst the ongoing discussions and further negotiations, as these measures are also linked to the general-news issues of the global energy and finance sectors, especially pertaining to the ongoing conflict between Russia and the Western world.
Regarding oil product price caps, the G7, EU, and Australia introduced a cap on Russian oil in December 2022, with a $100 per barrel cap for diesel and a $45 per barrel cap for fuel oil. These sanctions, considered illegal by Russia, have led to Russia imposing a ban on the export of oil and oil products under contracts with price restrictions.
