BRUSSELS – EU ambassadors continued into Thursday night trying to reach an agreement on a maximum price for Russian oil, despite expectations that a deal was out of reach.
Talks on a price ceiling for Russian oil sales, led by the Group of Seven and other close allies of Ukraine, have been going on for more than a week in the EU seat.
Negotiators from the 27 EU member states need to agree on a price. Recent discussions have revolved around a price of $60 a barrel, several diplomats and officials said. That’s lower than the price initially suggested by the G7, a victory for hardline pro-Ukrainian states such as Poland that want to limit Russia’s oil revenues at lower prices.
On December 5, the European Union imposed a near-total embargo on Russian oil. EU insurers and tankers – half of the global fleet – will no longer be allowed to transport Russian oil. It does not apply to buyers of Russian oil, such as China and India, if they ship and insure cargoes with companies from countries outside the bloc imposing the cap.
Fearing a global oil crunch, the U.S. backed a price cap policy that would allow European tankers and insurers to continue promoting Russian oil exports as long as the oil they were transporting or insuring was sold at or below the capped price.
The advantage of this approach, according to its promoters, is that Russia loses some revenue by setting the cap below the price at which its oil would normally be sold on the market, but it has an incentive to keep selling crude because the price is still high enough to generate significant income. The cap also prevents Russian oil prices from rising beyond a certain point if global prices rise.
The price of Russian oil, also known as Urals, has fluctuated between $60 and $65 a barrel over the past week, a steep discount to other types of oil.
Poland and a handful of allies are the last remaining opponents in EU negotiations. They are pushing for the lowest possible prices to limit oil revenues that help fund the war in Ukraine, as well as frequently revising prices and imposing more sanctions on Russia.
By Thursday night, those points appeared to be settled, with EU diplomats entering what they hoped was a final round of talks before a deal could be struck. But several EU diplomats and officials said Poland had asked for an extension.
U.S. Treasury Undersecretary Wally Adeyemo said on Thursday he was encouraged by signs the EU was reaching an agreement around prices. “My view is that we will get this deal done,” Mr Adjemo told an event sponsored by Reuters, adding that he was optimistic that Poland would support a deal that its other allies would later ratify.
Polish diplomats expressed optimism that a deal could be reached, while others complained that the process had dragged on and threatened to fragment Ukraine’s European allies.
Alan Rapport Contribution report.