The price of EU Russian oil is approaching 60 dollars per barrel

BRUSSELS (AP) – The European Union was on the verge of imposing a $60/barrel price ceiling on Russian oil — a highly anticipated and complex political and economic maneuver designed to keep Russian supplies flowing to global markets by suffocating President Vladimir Putin’s ability to finance his war in Ukraine..

Diplomats said on Thursday that EU countries had tried to cross the finish line after Poland stood down to get as low a number as possible. “There is still white smoke coming from Warsaw,” said an EU diplomat, who spoke on condition of anonymity because talks are still ongoing.

The latest proposal, approved by 3 EU diplomats, comes ahead of a deadline to set discount oil prices by Monday, when Europe imposed an embargo on seaborne Russian crude. and the ban on the transportation insurance of those supplies comes into force. The diplomats also spoke on condition of anonymity because the legal process has not yet been completed.

The $60 figure is a close range to the current price of Russian crude oil, which fell below $60 a barrel this week, and is intended to prevent a sudden loss of Russian oil. To the world after the new sanctions of the West. That’s a big discount to international Brent, which traded around $87 a barrel on Thursday, but may be high enough for Moscow to continue selling even as it rejects the idea of ​​cutting the limit.

When the final figure is available, a new buyer cartel will be formed, which is expected to be made up of official and unofficial members. Western allies in the Group of Seven industrial powers led the effort to raise prices and still need to confirm the figure.

A coalition official, who was not authorized to comment publicly and spoke on condition of anonymity, expressed optimism that a deal could be reached on Friday, but warned that talks could potentially move into the weekend or possibly Monday.

The official added that imposing a price ceiling would help end the war sooner. On the other hand, the official said that failure to do so would be “a victory for Russia.”

Oil is the main pillar of the Kremlin’s financial income and export bans, sanctions and central bank asset freezes that began with the February invasion have kept Russia’s economy afloat so far. Russia exports about 5 million barrels of oil per day.

The risks of a price ceiling failure are huge for global oil supply. If it fails, or if Russia retaliates by cutting off oil exports, energy prices around the world could spiral. Putin said he would not sell oil under the price cap and would respond to countries that imposed the measure.

Consumers in the US and Europe may feel the effects of more spikes in gasoline pricesand people in developing countries may face higher levels of food insecurity.

With the EU and UK banning insurance for Russian oil shipments, the price cap allows companies to insure tankers bound for non-EU countries as long as oil prices are at or below the threshold. This would prevent price increases from the loss of supply from the world’s No. 2 oil producer and bring Russia’s oil revenues closer to current levels.

The Treasury Department has released guidance to help firms and marine insurers understand how to comply with the price cap.said that the price limit may change depending on market conditions.

Robin Brooks, chief economist at the Institute of International Finance in Washington, said the limit should have been imposed earlier this year when oil was around $120 a barrel.

“Obviously, oil prices have fallen since then and a global recession is a real thing,” he said. “The reality is that with oil prices right now, it’s unlikely to be mandatory.”

Critics of the cap measure, including former Treasury Secretary Steve Mnuchin, called the plan “ridiculous.”

Mnuchin told CNBC during a panel at the Milken Institute’s Middle East and Africa Summit in November that the price cap was “not only impossible, I think it’s the most ridiculous idea I’ve ever heard.”

Rachel Ziemba, associate senior fellow at the Center for a New American Security, said that while the worst-case scenario would involve Russia cutting off global oil supplies, “the Saudis and the Emiratis will increase production.”

“Russia has made it clear that countries that comply with the restriction will not receive their oil, and this may result in reductions in natural gas exports.” “It’s going to be an interesting few weeks and a few months.”


Huseyn reported from Washington. AP writer Aamer Madhani in Washington and businessman David McHugh contributed from Frankfurt, Germany.

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