EU 'needs time' before resuming talks on Russian oil price cap

Diplomats have failed to agree on $65-$70 per barrel ceiling suggested by G7

Oil tanker, the Vladimir Arsenyev, at a crude terminal near the port city of Nakhodka, south-east Russia. The EU wants to introduce a price ceiling for oil from Russia. Reuters
Beta V.1.0 - Powered by automated translation

European Union diplomats said they needed more time before resuming negotiations to cap the price of Russian oil, 24 hours after failing to agree on the $65-$70 a barrel ceiling suggested by the Group of Seven nations (G7).

An EU diplomatic source told The National that it remained unclear when talks would start again after an initial meeting scheduled for Thursday evening was cancelled. A second diplomat said that there was "no new timing" and that countries were talking bilaterally to try to find a compromise.

Pressure is increasing on the bloc to finalise a deal before sanctions on seaborne exports of Russian oil kick in on December 5.

The EU's 27 countries are split over the cap, with countries such as Poland arguing that the $65-$70 ceiling is too high and will be ineffective in stopping Russia from funding its war in Ukraine.

“Poland considers that this level should refer to the production costs per barrel of crude oil, and not to current market price,” said a third diplomat.

Current production costs for Russia are estimated at $20 a barrel. The EU should choose a cap close to but not the same as this figure, the official said.

Yet other countries such as Cyprus, Greece and Malta, which have big shipping industries, reportedly believe the figure suggested by the G7 is too low and have demanded compensation for the loss of business or more time to adjust.

"Poland say they can't go above $30 per barrel," one EU diplomat told Reuters. Cyprus wants compensation. Greece wants more time."

A consensus would trigger a joint announcement with the G7 — Canada, France, Germany, Italy, Japan, the UK and US.

Because the world's key shipping and insurance firms are based in G7 countries, the price cap would make it very difficult for Moscow to sell its oil — its biggest export item accounting for 10 per cent of world supply — for a higher price.

Crude oil from the Russian Urals already trades within the discussed range at about $68 per barrel.

Updated: November 24, 2022, 3:53 PM