EU Governments approve $60 Russian oil price cap per barrel

The EU has finally approved a $60 (€57) price cap per barrel for Russian oil imports with the objective of limiting revenues Russia receives from oil exports. This comes after many weeks of tense negotiations trying to placate both sides which wanted much harsher limits, and others pushing for a gentler one. Malta’s main concern was safeguarding its potential shipping sector which is significantly exposed to Russian oil.

The EU has as a result, aligned with a G7 plan to put a price cap on Russian oil adopted earlier in November.

The functioning of the price cap mechanism will be reviewed every two months to respond to developments in the market, and will be set at least five per cent below the average market price for Russian oil and petroleum products, calculated on the basis of data provided by the International Energy Agency.

Today’s decision sets the level at which the exemption apply, and introduces a transition period of 45 days for vessels carrying crude oil originating in Russia, purchased and loaded onto the vessel prior to 5th December 2022 and unloaded at the final port of destination prior to 19th January 2023. As the price cap may be periodically reviewed to adapt to the market situation, today’s decision also sets a transition period of 90 days after every change in the price cap, to ensure coherent implementation of the price cap by all operators.

Politico reported that Ukraine’s Zelensky is upset that the price cap is too generous calling the position ”weak”, while Russia is threatening to ban oil sales completely. “We are not going to use instruments linked with the price cap. We are now looking at mechanisms to ban the use of the price cap instrument,” said Russian Deputy Prime Minister, Novak.