EU talks close on new Russian oil price cap – POLITICO

EU countries could not reach an agreement on the price ceiling of Russian oil products, and the deadline for settling the price of Russian oil products is a few days away.

Talks between EU ambassadors, which were due to resume on Thursday, have now been postponed until Friday, six EU diplomats said, while diplomats seek a compromise. The European Commission proposed last week that – as part of the G7 coalition – the EU should set a price cap of $100 per barrel for products such as diesel that trade above the price of crude oil and $45 for products that trade at a discount to crude oil. apply.

But Poland and the three Baltic states have tried to lower the caps and lower the current G7 price ceiling for Russian crude from $60 a barrel. Russia’s Urals export blended crude oil traded between $46 and $52 per barrel in January. Hard-line EU countries want to lower the crude ceiling to between $40 and $50 to prevent fossil fuel revenues funding Vladimir Putin’s war against Ukraine. Diesel is currently trading around $120 to $130 per barrel.

The EU-wide ban on Russian oil products – crude oil products such as diesel, gasoline and jet fuel – will come into force on Sunday, February 5, and offers a hard deadline for a deal.

The G7 price ceiling is set to be implemented simultaneously so that Western shipping companies and insurance companies can continue to facilitate Russian oil exports that are sold at or below the ceiling. The EU ban and G7 caps are parallel to reducing Russian revenues while avoiding a major shock to global energy markets.

No progress was made at a meeting of EU ambassadors on Wednesday, which also discussed a package of new EU sanctions against Russia’s ally Belarus. Three EU diplomats said belligerent countries, led by Lithuania, were also pushing back on package exemptions from Belarus fertilizer sanctions, reflecting other countries’ concerns about global food security.

The European Commission will now continue to negotiate behind closed doors to finally reach an agreement at the next meeting of ambassadors on Friday. A similar last-minute dispute occurred late last year over Russia’s crude oil price ceiling, with an initial proposal of $65-70 a barrel reduced to $60 after opposition from Poland and the Baltic states.

“We are confident that an agreement will be reached before February 5,” said an EU diplomat. Meanwhile, a second diplomat said the larger EU countries were tired of the moral blackmail of the bellicose coalition.

The European Union’s ban on Russian diesel had led to fears of a supply cut, but a significant increase in imports in recent weeks has eased those concerns for now.

Some commentators have criticized the proposed cap for petroleum products.

Lauri Myllyvirta, senior analyst at the Center for Clean Air and Energy Research, said those caps are too high to have a significant impact.

“It really shows a cross-dressing on the part of EU countries,” Myllyvirta said. “The goal should be to keep Russian selling prices well below where the market dictates, close to production costs, and to deprive Russia of additional profits. Instead, the mindset of many countries is to set ceiling levels so high that they only act as a circuit breaker against price increases.

Barbara Munz and Leonie Kijewski contributed reporting.

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