Talks stall as nations
can’t agree on a price
ceiling, but diplomats
hope for accord soon
European Union talks on approving a price cap on Russian
oil hit a snag amid differences
among the 27 member states,
although diplomats said they
were hopeful a deal could be
struck in the coming days.
EU governments have
clashed over the price level at
which to set the cap and some
of the other details of the
mechanism put forth by the
Group of Seven advanced democracies. The price cap is the
West’s attempt to squeeze
Russia’s oil revenues as punishment for its invasion of
Ukraine while keeping global
oil supplies steady—and avoiding an increase in global energy prices. With it, the G-7
and Australia aim to ban providing maritime services for
Russian oil shipments unless
the oil is sold below the price.
Discussions among the
bloc’s officials had been expected to continue Friday evening and possibly over the
weekend, but EU officials said
they needed more time to broker a deal.
The European Commission,
the bloc’s executive arm, and
the G-7 have been looking at a
price cap of between $60 and
$70 a barrel. That is above the
price at which Russian oil is
currently selling.
All 27 EU member states
must agree on the price. The
G-7 is racing to put the price
cap into effect by Dec. 5, when
an EU embargo on Russian
crude-oil imports takes effect.
Officials in Washington and
around the G-7 were awaiting
the EU’s choice and have expected the bloc to take some
time to complete the negotiations. G-7 officials have been
supportive of the prices discussed in the EU.
U.S. officials, and in particular Treasury Secretary Janet
Yellen, have championed the
price-cap plan for months. On
Thursday, President Biden told
reporters in Nantucket, Mass.,
that he had spoken to Ms. Yellen about the plan, saying,
“It’s in play.”dent Volodymyr Zelensky
praised Poland and the Baltic
states for pushing for a far
lower price cap. Poland has
been calling for a cap of between $20 and $30 a barrel,
which Polish officials say is
closer to Russia’s cost of production.
“Limiting the price at the
level of up to 30 U.S. dollars per barrel seems a more feasible proposal. And I am grateful that such a proposal has
been put forward and is being
advocated,” Mr. Zelensky said
in a speech.
Several EU member states
with large maritime industries, especially Greece, Cyprus and Malta, have worried
that the price cap could hurt a
key part of their economies.
They wanted to keep the price
level as high as possible, and
some had lobbied the commission this past week to offer
them compensation for supporting the policy.
On Wednesday, the three EU
countries had insisted the price
cap shouldn’t be set below $70
a barrel, but EU diplomats suggested they had shown some
wiggle room on this during discussions with the commission
on Thursday and Friday.
Russian crude oil has fallen
in recent days to $56 a barrel,
about $28 below the price of
benchmark Brent crude, according to S&P Global Commodity Insights.
Russia has refused to abide
by the cap, and its response is
another wild card.
“We are proceeding for the
time being from the position
of President Putin that we will
not supply oil and gas to those
states that introduce and join
the cap,” Kremlin spokesman
Dmitry Peskov said Thursday.
He left wiggle room, though,
adding that Moscow would
formulate a position after analyzing the situation.
This past week’s deadlock
underscored longstanding concerns in the EU over the price
cap. European countries had
worried that the price cap
would be difficult to effectively implement and police
and had hoped a number of
countries, in addition to the
G-7 and Australia, would join
the measure.
U.S. officials have said that
the price cap would be reviewed regularly and that if
the system worked, the price
could gradually be tightened.
However, some U.S. sanctions
experts have warned a price
cap north of $60 a barrel
would do little to crimp the
Kremlin’s revenues.
“If the cap is set at roughly
the same price that Russia
currently sells its oil, it’s hard
to see how the policy will cut
Putin’s profits. Hopefully this
cap is just a starting point,
and the West is prepared to
tighten it as market conditions
ease,” said Edward Fishman, a
senior researcher at Columbia
University’s Center for Energy
Policy who helped shape U.S.
sanctions policy against Russia in the aftermath of its 2014
annexation of Crimea.
Two European diplomats
said one factor that could help
advance a deal in the coming
days is work on a ninth package of sanctions against Russia. Poland and the Baltic
states have been urging new
penalties against Russia over
its invasion of Ukraine in recent weeks.
The European Commission
was expected to start discussing which measures to take
with member states over the
weeken