EU to postpone lowering Russian oil price cap

The European Union will not move forward with its plans to establish a new price cap for Russian oil. The decision is related to concerns that the new conflict in the Middle East will lead to a rise in oil prices, writes Politico.

According to the publication, the proposal, which envisaged reducing the maximum price for Moscow oil from 60 to 45 dollars per barrel, was supposed to be discussed on Monday in Brussels by the foreign ministers of the bloc's countries. However, two diplomats said that the escalating conflict between Israel and Iran means that this plan is no longer feasible.

"The idea of lowering the price limit is unlikely to be implemented due to the international situation in the Middle East and instability. At the G7 meeting this week, all countries agreed that they would rather not make a decision at this time. Prices were quite close to the limit, but now they are going up and down, the situation is very unstable at the moment,” the source noted.

The proposed sanctions to limit the price to $45 a barrel would result in the loss of billions of dollars in oil revenues for Russia, which is trying hard to maintain high levels of military spending and plug holes in the state budget.

Initially proposed by Ukraine, the reduction in the price ceiling was included in the text of the EU’s 18th package of sanctions. However, as experts note, without the support of US President Donald Trump, the implementation of this idea is questionable.

"Reducing the ceiling price without the consent of the United States will not be effective", says Maria Shagina, a sanctions expert at the International Institute for Strategic Studies.

She also emphasizes the need to strengthen control over compliance with sanctions, "because currently about 90% of Russian oil is supplied at a price that exceeds the established limit".

Price ceiling for Russian oil

The European Commission has proposed reducing the regulated price of Russian oil from $60 to $45 per barrel. Most G7 countries are ready to support the restrictions, but the United States is categorically against this.

On June 16, it became known that the reduction in the regulated price of Russian oil is under threat. According to media reports, the bloc's member states cannot agree on this issue without the support of the United States.