West News Wire: According to sources cited by Reuters on Friday, the European Union has informally agreed to a $60 per barrel price restriction on Russian seaborne oil. An adjustment mechanism is apparently part of the temporary agreement to maintain the cap at 5% below market value.
The article stated that the agreement still needs to receive official approval from every EU government by Friday.
The union intends to establish a process that would permit changes to the maximum price at which Russian oil may be purchased every two months, according to a draft document seen by Reuters. It would enable for evaluations of the scheme’s performance, enabling the bloc to react to any potential “turbulences” that might develop in the oil market.
The document said a 45-day “transitional period” would apply to vessels carrying Russian-origin crude oil that was loaded before December 5 and unloaded at its final destination by January 19, 2023.
EU nations have been deadlocked since last week as Poland and the Baltic nations demanded measures that put more pressure on the Kremlin’s revenues. Warsaw, which had pushed for a $30 price cap, had as of Thursday evening not confirmed whether it would support the deal, an EU diplomat told Reuters. The countries have to clinch an agreement before the Monday deadline when the bloc’s oil sanctions kick in.
US Deputy Treasury Secretary Wally Adeyemo reportedly told Reuters on Thursday that a $60 per barrel price cap would be acceptable to Washington, saying it was “in the range” discussed by the Group of Seven (G7) countries.
The initial G7 proposal last week was for a price cap of between $65 and $70 per barrel with no adjustment mechanism. G7 nations are aiming to put the price cap in place before December 5, when wider EU sanctions on Russian oil trade are due to come into force.
The restrictions would ban shipping and services needed to transport Russian oil, such as brokering, financial assistance and insurance, unless the cargoes are purchased at or below the cap.
Moscow has already threatened to ban crude supplies to countries that participate in the scheme.