EU has not agreed to limit the price of Russian oil
EU has not agreed to limit the price of Russian oil
2022.11.26 08:25
EU has not agreed to limit the price of Russian oil
Budrigannews.com – Poland and the Baltic states objected to a proposal that they believe is too generous to Moscow, which led diplomats from the European Union to suspend discussions on limiting the price of Russian oil.
According to people familiar with the situation, diplomats had anticipated that a deal would be reached on Friday night; however, positions remained entrenched, and the talks were rescheduled for Monday.
The bloc has been at odds over how strict the price cap set by the Group of Seven should be.
Poland and the Baltic countries are offended at a proposition to cover Russian oil costs at $65 per barrel limit, as the level is over the rates Moscow sells unrefined at this point. According to a senior diplomat, Poland wants additional sanctions, a review mechanism, and a price below the market level.
The conflict has revealed the fundamental tension at the heart of the price cap concept, as Poland and the Baltic states have dug in. Countries are forced to choose between two almost impossible to resolve priorities:attempting to stifle Russia’s revenue and steer clear of potentially unpleasant spikes in the price of oil that could have a negative impact on the global economy.
In an interview with Bloomberg TV, European Commission Vice President Valdis Dombrovskis stated, “If you put the price cap too high, it doesn’t really bite.”Because oil is the largest source of revenue for the Russian budget, it is critical to get this right so that Russia can effectively finance this war.
Greece and other shipping nations favor a higher level that will facilitate trade flow.
The discussions have been laden on the grounds that at $65, the cap is over the costs that Russia is as of now tolerating for its unrefined – a level intensely limited to worldwide benchmarks. Moscow may be able to argue that everything is as it always has been.
The Kremlin had previously stated that it would not sell oil to anyone signing up for the cap; however, it appeared on Thursday to suggest that it might soften its stance.
A cutoff time is approaching:The European Union will impose sanctions on Russian oil on Dec. 5, and the disruption to the market will probably be even worse if the price cap is not set.
Any ship carrying Russian oil would be denied access to insurance and services under the EU sanctions. The cap lets you use those services, but only if you buy less crude than a certain amount. The price cap was proposed by the US earlier this year as an alternative to EU sanctions that were so severe that they could potentially stop production in large areas.
The United States argued that, in addition to being disastrous for the global economy, a rise in prices brought on by EU sanctions could ultimately benefit Putin.
In recent days, oil prices have dropped because there are signs that a deal could keep Russian oil flowing and relieve pressure on the global market.
