Politico: EU to abandon proposal to lower ceiling price for oil from Russia due to conflict in Middle East
Kyiv • UNN
The European Union will not lower the price cap on Russian oil due to the escalation of the conflict in the Middle East. The proposal to lower the price from $60 to $45 per barrel has been postponed due to market instability.
The European Union will refuse to impose a strict new price cap on Russian oil exports, which finance the Kremlin's war in Ukraine, due to fears that a new conflict in the Middle East will lead to rising oil prices. This was reported by Politico, according to UNN.
Details
The proposal, which would lower the maximum oil price for Moscow from $60 per barrel to $45, was to be discussed on Monday in Brussels by the bloc's foreign ministers.
However, two diplomats confirmed to POLITICO that the escalating conflict between Israel and Iran means the plan is no longer viable.
The idea of lowering the price cap is unlikely to work due to the international situation in the Middle East and its instability
"At this week's G7 meeting, all countries agreed that they would prefer not to make a decision now," the diplomat added.
"Prices were quite close to the limit; but now prices are rising and falling, the situation is too unstable at the moment."
At the G7 summit in Canada, European Commission President Ursula von der Leyen admitted that the current measures "had little effect, but in recent days we have seen that the price of oil has risen and the current price cap is fulfilling its function... So at the moment, there is little pressure to lower the oil price cap."
The proposal for a $45 per barrel oil price cap would result in Russia losing billions of dollars in oil revenues as it struggles to maintain high military spending and close holes in its national budget.
After the price cap reduction was initially proposed by Ukraine, it was included in the text of the 18th EU sanctions package presented earlier this month. However, experts note that without the support of US President Donald Trump, the implementation of this idea will be impossible.
"Lowering the cap without US agreement would be ineffective," said Maria Shagina, sanctions expert at the International Institute for Strategic Studies. "Conceived as a buyers' cartel, the cap requires US participation."
Shagina also emphasized stronger enforcement, "as currently about 90 percent of Russian crude oil is supplied above the established price level."
Oil prices have risen sharply since Israel and Iran began trading blows. European foreign ministers will meet their Iranian counterparts in Geneva on Friday, while Trump may order a strike on the most fortified nuclear facilities of the Tehran regime.
Reminder
Brent oil prices cut gains from the previous session and fell by almost $2 on Friday after the White House delayed a decision on US involvement in the Israeli-Iranian conflict, but they are still heading for a third consecutive week in positive territory.