Days of feverish negotiations are ahead for the European Union
Days of heated negotiations are ahead for the European Union as the European Union looks for ways to reduce Russia's revenue from oil and oil exports and increase the impact of sanctions against Moscow. The talks will focus this time on revising the ceiling imposed on Russian oil prices by the EU. and the G7 countries and has been in force since December. European diplomats will also decide the level of the new ceiling they plan to impose from the beginning of February on petroleum products, including diesel. The cap on the price of Russian oil when it is exported to third countries is designed to allow the flow of Russian crude and refined products but limit Moscow's revenue that funds Vladimir Putin's war against Ukraine. The imposition of a new ceiling on both oil and petroleum products requires unanimity among the member states, as well as the imposition of new sanctions against Moscow. This is also the reason why the negotiations are expected to be feverish.
Until now, the member states have agreed to review the ceiling every two months, which means that the relevant negotiation should have started earlier in January. However, the US and some allies prefer to wait until March to review the oil cap and for now keep the original $60 a barrel.
They argue that the mechanism has already proven effective in that it has led to a reduction in oil prices. At the same time, however, a group of countries led by Estonia, Lithuania and Poland are lobbying to lower the oil cap further, as they believe the current level is too high compared to current market prices.< /p>
In their proposal sent to member states at the beginning of the week, they cite International Energy Agency estimates, according to which an average price of Russian oil on the Russian market was $54 per barrel in December and $52 in January. They are therefore insisting that the ceiling be lowered further to somewhere between $40 and $50 a barrel. In the relevant document leaked to Bloomberg, they emphasize that “in its first steps, the ceiling seemed to be working, but now it is quite clear that we must further exploit this mechanism”.
They even add that Russia is preparing new and more dramatic attacks against Ukraine, which is why “it is of the utmost importance that we put greater pressure on the Russian economy and cut it off from oil revenues.” They remind, after all, that the agreement on the ceiling reached in December provides, among other things, that its price will be kept at least 5% below the average market price.
As regards the new ceiling planned by the EU in Russia's oil derivatives, the aim is to secure and stabilize supplies of fuels such as diesel from February 5, when the ban on imports of the fuel from Russia takes effect.
