The coalition of states that wants to cap Russian oil and gas prices, which includes the G7, the European Union and Australia, should announce the proposed cap “in the coming days,” a US Treasury official said on Tuesday.
The EU agreed in early October to set a cap on the price of Russian crude as part of an eighth package of sanctions on Russia over the war in Ukraine, but has yet to define the range.
According to the president of the European Commission, Ursula von der Leyen, Moscow uses the profits from the sale of fossil fuels “to finance its work”, so the price cap will allow “reducing Russia’s income, on the one hand, and keep the world energy market stable, on the other”.
The goal of the coalition is to reach a maximum price for Russian hydrocarbons that can be applied before the new EU sanctions come into force, scheduled to start on December 5, the date on which the European bloc also agreed ” ban Russian oil by sea”, despite acknowledging that “certain developing countries still need supplies of Russian oil”.
On Wednesday, EU countries failed to agree on a ceiling for Russian oil, so negotiations will continue.
According to the Tass agency, the ambassadors discussed the possibility of a range of 65-70 dollars per barrel, but the discussion revealed a deep division between countries that want to punish Russia, such as Poland and the Baltic states, which consider this ceiling to be too high, and the countries that receive a significant part of the revenue from oil shipping – Greece, Cyprus, Malta and others – who find the threshold level too low and threatens to undermine global oil trade.
For its part, the Kremlin indicated that the figures discussed by the EU on the price of oil are “absurd”. “Europeans still have very puzzling discussions about this price cap. They name hard-to-explain numbers, it feels like they are just trying to make a decision for the sake of making a decision, not for the effect, but just to show that the cap has been introduced,” Kremlin spokesman Dmitri Peskov said.
Peskov told reporters yesterday that Russia is not going to supply oil and gas to countries that join the price cap policy.
In response to the bloc’s sanctions over the invasion of Ukraine, Russia has drastically cut gas supplies to European countries. Until the end of 2021, cheap Russian gas accounted for more than 40% of European energy imports.