EU debates Russian oil price cap at $62 as talks slow

(Bloomberg) – European Union states have debated whether to set a price cap as low as $62 a barrel on Russian crude oil exports after several countries demanded a level that could put more pressure on Moscow, but talks remain stalled, diplomats said.

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Poland and the Baltic countries said the price level was still too high, diplomats said. Diplomats met Monday evening to discuss negotiations after they were suspended last week, but it is unclear how quickly they will be able to reach an agreement.

The EU initially proposed to cap the price of Russian oil at $65 a barrel. But with Russia already selling its crude at a discount, the cap levels being discussed are all higher than current market rates of around $52.

The group of countries pushing for a lower price also want to see a review mechanism added to the instrument for subsequent price reviews, as well as a firmer plan on a new sanctions package against Russia.

Read more: Russia’s flagship oil falls even lower than proposed EU price cap

Maritime nations, including Greece and Cyprus, opted for a higher price for the cap. The oil cap serves the dual purpose of trying to keep Russian oil in circulation while limiting Moscow’s revenue. One of the diplomats said Poland was now blocking a deal.

Major new European sanctions come into force on December 5, creating an urgency to get the price and other details.

A deal with the EU, which the bloc hoped to secure last week, would pave the way for a broader Group of Seven deal. The plan would ban shipping and services needed to transport Russian oil, such as brokerage, l financial assistance and insurance, unless purchased below the agreed price threshold.

Most G-7 countries will stop importing Russian crude later this year. Similar restrictions, including price caps, for other petroleum products are scheduled for February.

The idea of ​​price caps was conceived and promoted by the US Treasury Department. Asked about the status of talks with the EU on Monday, US National Security Council spokesman John Kirby said “these talks are going pretty solidly” and “going well.”

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

–With help from Jennifer Jacobs and Jordan Fabian.

(Updates with Kirby’s comment in last two paragraphs.)

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