EU member states have agreed to implement a $60 ceiling on global purchases of Russian oil after Poland dropped its objections to the long-debated deal aimed at denting the Kremlin’s fossil-fuel revenues, Report informs via the Financial Times.
Warsaw had delayed agreement on the cap after demanding a lower ceiling to further erode Moscow’s income. Its backing means the bloc will have the initiative in place before December 5, when a ban on imports of Russian seaborne oil into the EU comes into force.
The cap is designed to keep Russian oil flowing to countries such as India and China, but at a lower profit to Moscow.
It is intended to have global reach because Russian oil importers, who rely on insurance cover and shipping services from companies based in the EU and other G7 countries, would need to observe the price ceiling.
However, Russia has said it will not sell oil to any country participating in the cap, and India and China have so far not said they will implement it. Russia is expected to rely on tankers prepared to operate without western insurance, though traders have warned its exports may drop if it cannot access enough vessels.
Russia’s oil is already trading at a large discount.
US Treasury Secretary Janet Yellen, one of the forces behind the price cap plan this year, welcomed the agreement and commended Washington’s partners in the EU, saying it would “help us achieve our goal of restricting Putin’s primary source of revenue for his illegal war in Ukraine while simultaneously preserving the stability of global energy supplies”.
The cap is lower than the European Commission’s initial suggested price of as high as $70, following demands from Poland and other member states for it to be reduced. On Friday, benchmark Brent crude was trading at about $86.
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