BRUSSELS— The European Union was edging closer to setting a $60-per-barrel price cap on Russian oil — a highly anticipated and complex political and economic maneuver designed to keep Russia’s supplies flowing into global markets while clamping down on President Vladimir Putin’s ability to fund his war in Ukraine.
EU nations sought to push the cap across the finish line after Poland held out to get as low a figure as possible, diplomats said Thursday. “Still waiting for white smoke from Warsaw,” said an EU diplomat, who spoke on condition of anonymity because the talks were still ongoing.
The latest offer, confirmed by 3 EU diplomats, comes ahead of a deadline to set the price for discounted oil by Monday, when a European embargo on seaborne Russian crude and a ban on shipping insurance for those supplies take effect. The diplomats also spoke on condition of anonymity because the legal process was still not completed.
The $60 figure would mean a cap near the current price of Russia’s crude, which fell this week below $60 per barrel, and is meant to prevent a sudden loss of Russian oil to the world following the new Western sanctions. It is a big discount to international benchmark Brent, which traded at about $87 per barrel Thursday, but could be high enough for Moscow to keep selling even while rejecting the idea of a cap.
When the final number is in place, a new buyer’s cartel — which is expected to be made up of formal and informal members — will be born. Western allies in the Group of Seven industrial powers led the price cap effort and still need to approve the figure.
One coalition official, who was not authorized to comment publicly and spoke on the condition of anonymity, expressed optimism that an agreement could be reached as early as Friday, but cautioned the negotiations would potentially roll into the weekend or perhaps even Monday.
The official added that putting the price cap in place will help end the war faster. On the flipside, the official said failure to put it in place would be “a win for Russia.”
Oil is the Kremlin’s main pillar of financial revenue and has kept the Russian economy afloat so far despite export bans, sanctions and the freezing of central bank assets that began with the February invasion. Russia exports roughly 5 million barrels of oil per day.
The risks of the price cap’s failure are immense to the global oil supply. If it fails or Russia retaliates by stopping the export of oil, energy prices worldwide could skyrocket. Putin has said he would not sell oil under a price cap and would retaliate against nations that implement the measure.(AP)