Connect with us

Europe

EU reaches deal for $60-per-barrel price cap on Russian oil

News Agencies

Published

on

BRUSSELS (AP) — The European Union reached a deal Friday for a $60-per-barrel price cap on Russian oil, a key step as Western sanctions aim to reorder the global oil market to prevent price spikes and starve President Vladimir Putin of funding for his war in Ukraine.

After a last-minute flurry of negotiations, the EU presidency, held by the Czech Republic, tweeted that “ambassadors have just reached an agreement on price cap for Russian seaborne #oil.” The decision must still be officially approved with a written procedure but is expected to go through.

Europe needed to set the discounted price that other nations will pay by Monday, when an EU embargo on Russian oil shipped by sea and a ban on insurance for those supplies take effect. The price cap, which was led by the Group of Seven wealthy democracies and still needs their approval, aims to prevent a sudden loss of Russian oil to the world that could lead to a new surge in energy prices and further fuel inflation.

Poland long held up an agreement, seeking to set the cap as low as possible. Following more than 24 hours of deliberations, when other EU nations had signaled they would back the deal, Warsaw finally relented late Friday.

Advertisement

“Crippling Russia’s energy revenues is at the core of stopping Russia’s war machine,” Estonian Prime Minister Kaja Kallas said, adding that she was happy the cap was pushed down a few extra dollars from earlier proposals. She said every dollar the cap was reduced amounted to $2 billion less for Russia’s war chest.

“It is no secret that we wanted the price to be lower,” Kallas added, highlighting the differences within the EU. “A price between 30-40 dollars is what would substantially hurt Russia. However, this is the best compromise we could get.”

The $60 figure sets the cap near the current price of Russia’s crude, which recently fell below $60 a barrel. Some criticize that as not low enough to cut into one of Russia’s main sources of income. It is still a big discount to international benchmark Brent, which traded at $86.68 a barrel Friday, but could be high enough for Moscow to keep selling even while rejecting the idea of a cap.

Advertisement

There is a big risk to the global oil market of losing large amounts of crude from the world’s No. 2 producer. It could drive up gasoline prices for drivers worldwide, which has stirred political turmoil for U.S. President Joe Biden and leaders in other nations. Europe is already mired in an energy crisis, with governments facing protests over the soaring cost of living, while developing nations are even more vulnerable to shifts in energy costs.

But the West has faced increasing pressure to target one of Russia’s main moneymakers — oil — to slash the funds flowing into Putin’s war chest and hurt Russia’s economy as the war in Ukraine drags into a ninth month. The costs of oil and natural gas spiked after demand rebounded from the pandemic and then the invasion of Ukraine unsettled energy markets, feeding Russia’s coffers.

Advertisement

U.S. National Security Council spokesman John Kirby told reporters Friday that “the cap itself will have the desire on limiting Mr. Putin’s ability to profit off of oil sales and limit his ability to continue to use that money to fund his war machine.”

He touted the EU’s consensus, saying the $60-per-barrel cap “is appropriate.”

More uncertainty is ahead, however. COVID-19 restrictions in China and a slowing global economy could mean less thirst for oil. That is what OPEC and allied oil-producing countries, including Russia, pointed to in cutting back supplies to the world in October. The OPEC+ alliance is scheduled to meet again Sunday.

Advertisement

That competes with the EU embargo that could take more oil supplies off the market, raising fears of a supply squeeze and higher prices. Russia exports roughly 5 million barrels of oil a day.

Putin has said he would not sell oil under a price cap and would retaliate against nations that implement the measure. However, Russia has already rerouted much of its supply to India, China and other Asian countries at discounted prices because Western customers have avoided it even before the EU embargo.

Most insurers are located in the EU or the United Kingdom and could be required to participate in the price cap.

Advertisement

Russia also could sell oil off the books by using “dark fleet” tankers with obscure ownership. Oil could be transferred from one ship to another and mixed with oil of similar quality to disguise its origin.

Even under those circumstances, the cap would make it “more costly, time-consuming and cumbersome” for Russia to sell oil around the restrictions, said Maria Shagina, a sanctions expert at the International Institute for Strategic Studies in Berlin.

Robin Brooks, chief economist at the Institute of International Finance in Washington, said the price cap should have been implemented when oil was hovering around $120 per barrel this summer.

Advertisement

“Since then, obviously oil prices have fallen and global recession is a real thing,” he said. “The reality is that it is unlikely to be binding given where oil prices are now.”

European leaders touted their work on the price cap, a brainchild of U.S. Treasury Secretary Janet Yellen.

“The EU agreement on an oil price cap, coordinated with G7 and others, will reduce Russia’s revenues significantly,” said Ursula von der Leyen, president of the European Commission, the EU’s executive arm. “It will help us stabilize global energy prices, benefiting emerging economies around the world.”

Advertisement

___

Hussein reported from Washington, and McHugh from Frankfurt, Germany. AP reporter Aamer Madhani contributed from Washington.

Advertisement
Continue Reading
Advertisement

Advertisement

Breaking News

Editor Pick’s

Latest Entertainment

Entertainment50 mins ago

Splash Mountain closed at Disney World. Here’s why and what’s next.

Splash Mountain is officially closed at Walt Disney World. Longtime fans flocked to Magic Kingdom for one last splash over the...

Entertainment55 mins ago

Princess Eugenie Is Pregnant! Royal Announces She’s Expecting Baby No. 2 with Jack Brooksbank

Jack Brooksbank (L) and Princess Eugenie attend the Horan & Rose Show: Modest! Golf co-founder Niall Horan and Justin Rose...

Entertainment11 hours ago

‘AGT: All-Stars’ couple Power Duo confesses crush on live TV: ‘He didn’t know that I loved him first’

Gervin of ‘Pilipinas Got Talent’-winning aerial act Power Duo confesses his crush to his professional partner, Anjanette, on live TV....

Entertainment13 hours ago

Pamela Anderson says she has ‘no ill will’ toward Tim Allen after he denies alleged ‘Home Improvement’ flashing

Pamela Anderson’s book and documentary are available Jan. 31. (Photo: Dia Dipasupil/Getty Images) Tim Allen shot down Pamela Anderson‘s story,...

Entertainment14 hours ago

Razzie Awards face sharp criticism for nominating ‘Firestarter’ child star: ‘Repulsive and wrong’

Ryan Kiera Armstrong in ‘Firestarter’ (Photo: Ken Woroner/Universal Pictures/courtesy Everett Collection) Since their launch in 1981, the Golden Raspberry Awards...

Entertainment15 hours ago

Holly Madison left Hugh Hefner because ‘verbal abuse’ got ‘so bad’: ‘I couldn’t stand it anymore’

Holly Madison, here with Hugh Hefner in 2009, opens up about hosting true crime show The Playboy Murders. (Photo: Getty...

Entertainment15 hours ago

Everything you need to know about Kylie Jenner’s lion head dress

Kylie Jenner, Naomi Campbell and Doja Cat were a few of the celebrities drawing attention to Schiaparelli’s spring 2023 Haute...

Entertainment17 hours ago

Shailene Woodley reflects on Aaron Rodgers split: ‘Darkest, hardest time in my life’

Aaron Rodgers and Shailene Woodley were engaged for a year before splitting for good. (Photo: Aaron Rodgers via Instagram) Shailene...

Advertisement

Latest Sports

Sports42 mins ago

NFL playoffs announcers: TV broadcasters, announcing crews for AFC, NFC Championship Games

The NFL playoffs continue this weekend with the NFC Championship Game and the AFC Championship Game. Who is going to...

Sports1 hour ago

What’s next for Matt Patricia and the Patriots?

Will Matt Patricia be given a new role with the Patriots, or will he continue his career elsewhere? Our Phil...

Sports2 hours ago

Azarenka beats ‘fears of failing’ for first Melbourne semi in 10 years

Victoria Azarenka reached her first Australian Open semi-final since winning the title in 2013, then opened up Tuesday about overcoming...

Sports2 hours ago

Karen Khachanov sparks political row at the Australian Open

Russian No3 Karen Khachanov caused a stir with a political statement at the Australian Open – although it was not...

Sports2 hours ago

NHL trade deadline: 20 players who could be on the move

The NHL trade deadline is just over a month away, but talks involving some of the bigger names on the...

Sports3 hours ago

Tiger Tip-Off Preview: Ole Miss

Though there were plenty of positives to take away from the game, Mizzou couldn’t overcome the absence of senior forward...

Sports3 hours ago

‘Their’s was way worse right?’ Pat McAfee believes Cowboys’ last play is worse than Colts’ fake punt

The Dallas Cowboys' last play against the San Francisco 49ers brings back unpleasant memories for the former Indianapolis Colts punter.

Sports3 hours ago

‘Very proud’ Azarenka sets up Rybakina semi-final in Melbourne

Two-time Australian Open champion Victoria Azarenka surged into the semi-finals on Tuesday and secured a date with big-serving Elena Rybakina,...

Technology Hot News

Technology5 days ago

Led by "Amazon" and "Microsoft" .. the technology giants are planning to lay off 64,000 employees

After 10 years of driving the stock market bull run, big tech companies are racing to downsize staff to adapt...

Technology6 days ago

Apple introduces MacBooks with new M2 processors

Yesterday, Tuesday, Apple unveiled MacBooks powered by the new, faster “M2 Pro” and “M2 Max” processor chips, in a surprise...

Technology6 days ago

All you need to know about the upcoming Galaxy S23 phones from Samsung

Samsung has officially announced that the (Galaxy Unpacked 2023) event will be held this year on Wednesday, February 1, which...

Technology6 days ago

FTX Exchange Announces Hacking and Stolen $415 Million in Cryptocurrency

Bankrupt American cryptocurrency firm FTX announced today, Wednesday, that $415 million in cryptocurrency has been hacked and stolen from the...

Technology6 days ago

Because of a "fraudulent tweet"… Elon Musk's trial begins

Elon Musk's trial began Tuesday in San Francisco with the selection of jury members who will have to decide whether...

Technology7 days ago

An electric spoon replaces salt and spices, but with conditions

Experts have developed an electric spoon that is able to replace spices and flavors and affect the taste buds in...

Technology1 week ago

The biggest dangers of using tracking devices.. so you can escape?

If you spot an unknown Bluetooth tagging device, there are ways to disable the device so it can't track your...

Technology1 week ago

New Twitter.. For You tab to web version

The Twitter platform announced that it will bring the new tab (For You), which launched last Tuesday for iPhones and...

Advertisement