EU diplomats fail to agree on $62 cap as price of Russian oil falls

Poland, Lithuania and Estonia say the figure is too high

An oil tanker off the Black Sea port of Novorossiysk, Russia. The EU is still debating a price ceiling for Russian oil. AP

European Union diplomats meeting for a second week in a row failed to agree on a ceiling to cap Russian oil exports as countries remained divided about how to best to reduce Moscow’s capacity to fund its war in Ukraine.

The European Commission brought down its initial suggestion of $65-$70 a barrel to $62 during discussions in Brussels on Monday evening but Poland, Lithuania and Estonia said the figure was still too high, one EU diplomat told The National.

A second official said “there was improvement in the proposal, but details still need to be analysed by the capitals, not only price as such, but also the review mechanism”.

Discussions are expected to continue this week. The cap is aimed at trying to keep Russian oil flowing to avoid global shortages while at the same time limiting Moscow’s revenue.

Pressure is increasing on the bloc to finalise a deal before next Monday, when Brussels is due to introduce an outright ban on seaborne imports of Russian oil.

The Group of Seven (G7) nations has proposed a softer version of the EU ban to keep oil supply to the global economy steady. Russia supplies 10 per cent of the world's oil.

Figures under discussion are higher than current market rates of around $52 and production costs can be as low as $20 a barrel for Russia.

The country’s key Urals grade on Friday fell to $51.96 a barrel at the Baltic Sea port of Primorsk, according to data provided by Argus Media Ltd, a publisher of physical commodity prices. It fell by a similar amount, and to a similar level, to Novorossiysk in the Black Sea.

A consensus on a cap is expected to trigger a joint announcement with the G7 — Canada, France, Germany, Italy, Japan, the UK and US.

Maritime nations such as Greece and Cyprus were worried that a cap would hit their shipping industries but diplomats told Reuters that some concessions in the legal text and were no longer an obstacle.

The price cap idea was devised and promoted by the US Treasury Department. Asked about the status of the EU talks on Monday, US National Security Council spokesman John Kirby said “those discussions are going on in a pretty robust fashion” and “going well”.

“Our EU colleagues are working through the modalities of that right now, how that would be implemented, what level it’s going to be at,” he said at a White House briefing. “I don’t think we believe there’s a pressure on us right now to get more involved than we already are.”