Brussels struggles for
unity on measure to
cut Putin’s war funds
Brussels is racing to finalise the proposed price ceiling on Russian oil shipments in the coming days after EU governments clashed over the level of the
cap and whether to link it to a wider
roundof sanctions.
The EU was struggling to settle its differences over the weekend as it
attempted to stay ahead of a December
5 deadline,when a previously agreed EU
embargo on seaborne Russian oil kicks
in. Talks have stalled in recent days as
Poland has led a push for a far lower
price ceiling than the European Commissionadvocates.
Brussels has been working alongside
the G7 nations to implement the proposed price ceiling on seaborne Russian
oil with the goal of allowing the flow to
continue while pushing down Moscow’s
ability to funditswarinUkraine.
The initiative would ban insurance
and other services essential to the seaborne shipment of Russian crude unless
soldator belowaG7-agreed pricelevel.
But while EU member states are willing to sign up to themeasure, they differ
on the level of that cap. “This is a
momentwhenwe need to send clear signals of unity to [Russia president]
Vladimir Putin,” saidoneEU diplomat.
The commissionis pushing for amaximum price level of $65 a barrel, but
hawkish member states led by Poland
say this would be ineffective because it
is too close to the price Russia already
gets on the markets, meaning the sanctionwould not punish theKremlin.
Brent crude, the international benchmark, is trading at about $84 a barrel,
but Russia’s oil has fallen to a steep discount as European buyers turn away,
with its main Urals grade trading at
about $66 a barrel. Warsaw has been
demanding amuchlower price, arguing
it is necessary to ensure Putin’s oil revenuesare curtailed.
Warsaw also wanted to include the oil
price capin awider ninth package of EU
sanctionsonRussia, theofficial said, but
the commission is concerned that this
could further snarl up negotiations.
Poland and other states are also haggling over a review mechanism for the
pricelevel.
Other EU states, including those with
big shipping industries such as Greece,
Malta and Cyprus, want to ensure the
priceis sufficiently high to keep tradein
Russian oil flowing— a positionlikely to
be supported by theUS.
The US Treasury has led the push to
introduce the G7 price cap partly due to
concerns EU sanctions could trigger an
inflationary surge in oil prices if too
muchRussianoil cannotmakeit tomarket. If the price cap level is set too low,
analysts argue, Russia could lose the
incentive to keep producing, preferring
instead to curtail output to drive up global prices to compensate.
Bringing the oil price cap into force
will require action not only by the G7
allies but also unanimous agreement
among the 27 EU member states,
because it means amending the already
agreed EU embargo on Russian seaborneoil that startsonDecember5.
Next Sunday, Russia is also due to
meetmembers of the Opec+ group such
as Saudi Arabia to discuss production
policy, setting up a critical week for the
oil market. The commission declined to
comment.